The board of directors of Anadarko Petroleum said on Monday that the buyout offer of Occidental Petroleum is much superior to their agreement to sell its business to Chevron. Thus, the deal with the oil giant in doubt. This reversal marks the recent twist in a rare bidding tussle in the oil and gas sector. Now, Chevron has four days to make a counter agreement of the latest bid of Occidental for Anadarko. Anadarko is basically an oil and gas driller having prized assets in the US Permian Basin, the Gulf of Mexico and Africa.
The share price of Anadarko happened to be quite flat after making a jump of 3.8% on Monday. Last month, Chevron had struck an agreement to buy Anadarko for $33 billion or for $65 per share. Soon after, Occidental had offered a price of $76 per share. On Sunday, Occidental managed to sweeten their bid by offering to pay maximum in cash for Anadarko. This came after the earlier structure of transaction happened to be a 50-50 cash and stock deal. The board of directors of Anadarko in a unanimous manner decided that the revised offer is a much superior proposal under their terms of agreement with Chevron. The board seeks to cancel the deal with Chevron and enter into a definitive agreement to sell off their business to Anadarko.
Most of the investors expect Chevron to come up with a counter offer within the low to mid $70s range. This would help match up with cash to the stock ratio of Occidental. Morgan Stanley said that Occidental would have very less flexibility to revise their offer further because of concerns in the balance sheet. The primary concern in the balance sheet is that they are quite heavy on debt.
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