Anadarko Petroleum Corp. ceased to exist Aug. 8, as the company's shareholders voted to approve its $57 billion acquisition by Occidental Petroleum Corp. The vote concluded the merger of the two Houston-area oil and gas producers, but the drama is far from over.
Occidental said in a statement that more than 99% of Anadarko voters had approved the deal. Occidental shareholders did not have an opportunity to vote on the merger.
"With Anadarko's world-class asset portfolio now officially part of Occidental, we begin our work to integrate our two companies and unlock the significant value of this combination for shareholders," said Vicki Hollub, Occidental's president and CEO. "We expect to deliver at least $3.5 billion annually in cost and capital spending synergies and the focus of our Board and management team is on execution to achieve the promise of this exciting combination. We look forward to updating the market on our continued progress in the months ahead."
The deal is the culmination of Hollub's quest to purchase the company that lasted more than two years. Hollub repeatedly attempted to acquire Anadarko, starting in July 2017, only to be rejected. It took the involvement of Chevron Corp. and its $52 billion offer in April for Occidental to kick into high gear and assemble a better offer.
Within two weeks of Anadarko's announcement that it had reached a merger agreement with Chevron, Hollub and Occidental assembled what Anadarko's board of directors believed was a proposal superior to the one they had agreed to. The two sides began to negotiate again, even though Anadarko was still unwilling to break with Chevron at that time. When Chevron was asked if it would sweeten its deal, however, the company's leadership refused.
While Anadarko and Occidental negotiated, Hollub secured an additional $10 billion in cash from Berkshire Hathaway Inc. and found a buyer in Total SA for Anadarko's African assets in an $8.8 billion deal that would take effect when Occidental's acquisition was closed. By May 5, Occidental's offer was $59 in cash and 0.2934 in company stock. Anadarko deemed this a "superior offer" and gave Chevron four days to respond. The giant declined, informing Anadarko it would take its $1 billion termination fee and move on. Occidental and Anadarko announced their merger the same day.
"The substantial cash component of the merger consideration provides Anadarko shareholders with immediate and relatively certain value with respect to their shares," Occidental said in an S-4 statement detailing the transaction. "Following the merger, Anadarko stockholders will also have the opportunity as stockholders of Occidental to participate in the upside of the combined company, including future growth and anticipated synergies, particularly in the Permian Basin."
Not everyone has been on board with the deal. Shares of Anadarko crashed to a decade low of $46 at the close of the New York Stock Exchange on Aug. 7, down more than $22 from their six-month high of $68.37 per share on April 8. The lack of a vote by Occidental shareholders on the deal, along with the terms of the deal with Berkshire Hathaway, have drawn the ire of activist investor Carl Icahn. Icahn, who owns approximately 4.4% of Occidental stock, has called the company's leadership "abysmal," has filed suit over the merger and is attempting to rally backing from shareholders to oust four members of the company's board of directors. Occidental's leadership, in turn, has derided the qualifications of Icahn's slate of nominees and has advised shareholders to ignore his efforts to trigger a recall election.