Wall Street Surprised That Chevron Walked Away From Anadarko

(Bloomberg) -- Risk arbitrage traders and analysts are surprised that Chevron Corp. decided to walk away from Anadarko Petroleum Corp. A survey conducted Wednesday by Bloomberg News showed that a vast majority had expected Chevron to raise its bid.

According to a survey of 21 risk arb traders and analysts, 81% expected that Chevron would increase its bid for Anadarko, maybe outbidding Occidental Petroleum Corp. Only 5 of 21 didn’t expect Chevron to come back with a higher offer.

Occidental shares, which earlier fell the most since late 2016, reflect that surprise as Wall Street appeared to believe that Chevron would end up the winning bidder for Anadarko. Anadarko fell as much as 3.4%, the most intraday since March 22 on more than three times average daily volume, as investors realized no higher bid was coming.

“Make no mistake about it, we had the financial capacity to easily outbid Occidental,” Chevron Chief Executive Officer Mike Wirth said in an interview with Bloomberg. “But an increased offer would have eroded value to our shareholders and would have diminished returns on our capital. We’re serious about being disciplined.”

--With assistance from Joe Carroll and Kevin Crowley.

To contact the reporter on this story: Joshua Fineman in New York at jfineman@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Scott Schnipper

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