Chevron Won't Counterbid for Anadarko--2nd Update
May 09 2019 - 9:40AM
Dow Jones News
By Micah Maidenberg
Chevron Corp. ended its pursuit of Anadarko Petroleum Corp.,
saying it won't increase its $33 billion offer to buy the shale
driller and ceding the takeover target to Occidental Petroleum
Corp.
The concession likely ends the fight between Chevron and
Occidental to control more of the Permian Basin, the chief engine
of the U.S. shale boom.
Chevron said Thursday that it would instead take the $1 billion
termination fee it is due from Anadarko and increase its share
repurchase rate by 25% to $5 billion a year.
"Winning in any environment doesn't mean winning at any cost,"
said Michael Wirth, Chevron's chairman and chief executive.
Shares of Chevron rose 3% in premarket trading Thursday.
Occidental's stock dropped 6%, while Anadarko shares fell about
3%.
Anadarko earlier this week said Occidental's $38 billion bid was
superior to its deal with Chevron, which was given four business
days to make another offer.
Chevron said it would allow the match period to expire, adding
that it expects Anadarko will terminate the merger agreement. Mr.
Wirth said Chevron didn't want to "dilute our returns or erode
value for our shareholders for the sake of doing a deal."
Production from Permian Basin, which spans more than 75,000
square miles of West Texas and New Mexico, has more than doubled in
recent years and makes up about one-third of total U.S. crude
output, according to the Energy Information Administration.
Chevron's departure marks a win for Occidental Chief Executive
Vicki Hollub, who took on the much larger oil giant in pursuing a
competitor closer to its own size. Ms. Hollub helped to close the
deal by lining up $10 billion of backing from Warren Buffett and
cut a deal with a French oil company, all in the space of two days,
to press her audacious project.
Write to Micah Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
May 09, 2019 09:25 ET (13:25 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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