Chevron drops out of race to buy Anadarko, with Occidental set to begin takeover talks
Chevron has admitted defeat in the multi-billion dollar battle to buy oil and gas giant Anadarko, handing victory to rival Occidental.
Chevron today said it could not beat Occidental’s $38bn (£29bn) takeover offer, which comprises a 78 per cent cash component.
Read more: Occidental updates Anadarko bid to beat Chevron's rival offe
Occidental's hostile offer came last month after Anadarko had already accepted a $33bn bid from Chevron.
Anadarko officially declared its preference for Occidental’s offer on Monday, vowing to break its agreement with Chevron unless it improved its offer.
But Chevron boss Michael Wirth today ruled out “winning at any cost”, adding: “Cost and capital discipline always matter, and we will not dilute our returns or erode value for our shareholders for the sake of doing a deal.
“Our advantaged portfolio is driving robust production and cash flow growth, higher investment returns and lower execution risk. We are well-positioned to deliver superior value creation for our shareholders.”
The megadeal will give US-based Occidental access to huge fields in the Permian basis in New Mexico and Texas. Chevron, meanwhile, does not walk away empty handed, pocketing a $1bn payout after Anadarko ripped up the companies' agreement.
Chevron also announced plans to up its share buyback rate by 25 per cent to $5bn a year.
Its shares rose 2.68 per cent to $120.18 this morning US time. Occidental's shares dropped 6.19 per cent to $56.48 while Anadarko investors sent shares down 2.94 per cent to $73.63.
The deal will also leave others in its wake as Occidental said it will sell off around $15bn in Anadarko assets to fund the takeover.
Read more: Warren Buffett backs Anadarko bid with $10bn Occidental investmen
Earlier this week Total snapped up Anadarko's African business, the French energy giant's biggest acquisition in nearly two decades.
And this morning a private jet registered to Occidental touched down close to Shell's Dutch headquarters, fuelling speculation of a deal with the Anglo-Dutch major.