Oil giants and Warren Buffet pitched in one of the energy industry’s biggest bidding wars in years. Chevron agreed to pay $33 billion in order to buy Anadarko Petroleum and expected to realize $2 billion from the deal. The acquisition also involved taking on $15 billion in debt, raising the whole cost to a total of $50 billion, making this, one of the biggest deals of the year.
Anadarko investors were thrilled about this deal as their shares climbed about 30% in the second week of April. They were even more thrilled by Occidental Petroleum’s counteroffer of a total of $57 billion (with debt), making this the energy sector’s biggest bidding war in a long time.
Even more interesting is that Occidental Petroleum rallied a couple of big allies in order to stand against a colossus like Chevron: Warren Buffet and the French oil and gas company, Total. Chevron predicted the merger will enhance its shale, deep-water and natural gas operations. Their target is to have stronger positions in the Permian Basin in the southwestern US, the deep-water Gulf of Mexico, and its liquefied natural gas (LNG) base in Mozambique.
But now, Chevron’s plans are shaken by the higher bid. It is worth mentioning that Vicki Hollub, Occidental’s CEO, was courting Anadarko for a couple of years, until Chevron joined in on the game in April threatening to render her efforts unsuccessful.
This already is one interesting bidding war, taking into account the participants and the numbers in the battle and is set to become one of the major events and acquisitions of 2019.