Carl Icahn Sues Occidental, Calling $38 Billion Anadarko Deal 'Fundamentally Misguided'--Update
May 30 2019 - 4:19PM
Dow Jones News
By Christopher M. Matthews
Activist investor Carl Icahn sued Occidental Petroleum Corp.
Thursday, calling its $38 billion deal to buy Anadarko Petroleum
Corp. "fundamentally misguided" and saying a sale of Occidental
might be better for shareholders.
Mr. Icahn -- who disclosed he holds $1.6 billion in Occidental
shares, or nearly 5% -- is seeking records in connection with the
Anadarko deal through a lawsuit filed in Delaware. The lawsuit
conceded that the deal is likely to close, but said Mr. Icahn is
seeking information to determine whether to rally shareholders to
call for a special meeting to elect new board members.
The lawsuit states that the Anadarko deal is "hugely overpriced"
and puts Occidental at risk if oil prices fall. Mr. Icahn added
Occidental should explore selling itself, arguing that it would be
in the best interest of shareholders.
Mr. Icahn is considering pushing for a special meeting "to
potentially elect new directors to ensure that Occidental is being
run in the interests of its stockholders going forward, and not in
the interests of directors and officers who appear to be interested
in growth for growth's sake," the lawsuit said.
Occidental said in a statement that the deal offered "a unique
opportunity to deliver compelling value and returns to the
shareholders of both companies," adding "We will respond in due
course" to the suit. Anadarko did not respond to a request for
comment. Both Occidental's and Anadarko's shares were slightly down
Thursday afternoon.
Occidental topped Chevron Corp. in a bidding war for Anadarko
earlier this month, winning prized assets in the heart of the U.S.
oil boom: the Permian Basin of West Texas and New Mexico.
Occidental's emergence as the likely victor means it is now poised
to swallow a company nearly its own size as it bulks up in the
region.
Chevron had agreed to purchase Anadarko for about $33 billion on
April 12, but Occidental offered the oil company $38 billion on
April 24 and then sealed its bid by boosting the cash portion of
its offer. Occidental's deal with Anadarko is expected to close in
the second half of 2019.
Occidental's aggressive efforts to win Anadarko included lining
up $10 billion in financial backing, from Warren Buffett's
Berkshire Hathaway Inc., via the sale of preferred stock -- and
included a deal to sell Anadarko's Africa assets for $8.8 billion
to French oil giant Total SA.
Mr. Icahn questioned both the Berkshire financing and the Total
deal in the lawsuit, saying both were rushed and costly to
Occidental. Mr. Icahn also said the transactions showed the
inexperience of Occidental CEO Vicki Hollub in mergers and
acquisitions.
"[A] ninety-minute deal 'negotiation' with one of history's
canniest investors, is no place to gain M&A experience -- at
least if you care about protecting your stockholders," the lawsuit
said, referring to the talks with Mr. Buffett.
Write to Christopher M. Matthews at
christopher.matthews@wsj.com
(END) Dow Jones Newswires
May 30, 2019 16:04 ET (20:04 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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