Occidental to acquire Anadarko for $57 billion

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In the aftermath of Chevron Corporation’s exit from the deal, Occidental Petroleum Corporation said it will go ahead to acquire Anadarko Petroleum Corporation.

Occidental said it will pay $59.00 in cash and 0.2934 shares of Occidental common stock per share of Anadarko common stock, in a transaction valued at $57 billion, including the assumption of Anadarko’s debt.

“This exciting transaction will create a global energy leader with a world-class portfolio, proven operational capabilities and industry-leading free cash flow metrics,” said Vicki Hollub, President and Chief Executive Officer of Occidental.

“This transaction further establishes Occidental as a premier operator in prolific global oil and gas regions with the ability to deliver production growth of 5% through investment in projects with industry-leading returns. With greater scale, an unwavering focus on driving profitable growth, and our commitment to growing our dividend, we are creating a unique platform to drive meaningful shareholder value.”

As part of its trade-offs, Occidental said it has entered into a binding agreement to sell Anadarko’s Algeria, Ghana, Mozambique and South Africa assets to Total S.A. (“Total”) (NYSE: TOT) for $8.8 billion. The sale is contingent upon Occidental completing its acquisition of Anadarko, and would be expected to close simultaneously or as soon as reasonably practicable afterwards.

Occidental said it expects to fund the cash portion of the consideration through a combination of cash from its balance sheet and fully committed debt and equity financing, including proceeds from the previously announced $10 billion equity investment by Berkshire Hathaway, Inc. The transaction is not subject to a financing condition.

Occidental is said it is confident in its ability to realize the full potential of the transaction while maintaining a strong balance sheet, investment grade credit rating and its current dividend. Occidental expects to reduce debt over the next 24 months through free cash flow growth, realizing identified synergies and executing a planned portfolio optimization strategy with $10-15 billion of divestitures over the next 12-24 months; $8.8 billion of which has already been agreed through the transaction with Total.

Bank of America Merrill Lynch and Citi are acting as Occidental’s financial advisors. Cravath, Swaine & Moore LLP is serving as legal counsel.