CVX Chevron Corporation

By Bradley Olson and Kimberly Chin 

Anadarko Petroleum Corp. said it was considering Occidental Petroleum Corp.'s $38 billion offer, weeks after agreeing to be taken over by Chevron Corp. for about $33 billion, raising the likelihood of a bidding war for assets in the heart of the U.S. fracking boom.

The declaration puts the onus on Chevron to raise its price or walk away from its deal for Anadarko, whose acreage in the Permian Basin of West Texas and New Mexico is coveted by both Chevron and Occidental as a path to further expansion.

Chevron's deal with Anadarko includes a $1 billion breakup fee, a factor that may not make it necessary for Chevron to completely match the Occidental offer. While Chevron can afford to raise its price significantly, some analysts have urged the company to proceed with caution given the existence of other potential targets.

The Anadarko board met Sunday and unanimously voted to reopen discussions with Occidental. Occidental Chief Executive Vicki Hollub said in an interview last week that the company had been in discussions with Anadarko for almost two years and made several offers in the weeks before the Chevron transaction announcement on April 12 that were ignored by Anadarko executives.

Shareholders in recent days had pressured Anadarko to openly consider both suitors and criticized the board's decision to increase executive payouts on April 11 by millions of dollars.

The vote was "an inexcusable breach of corporate governance," said Matthew Halbower, chief executive of hedge fund Pentwater Capital Management, in a letter Thursday. Pentwater owns about 7 million Anadarko shares.

Anadarko said its merger agreement with Chevron remains intact and the board currently "reaffirms its existing recommendation of the transaction." However, the agreement allows the board to resume negotiations with Occidental to seek a superior proposal.

A Chevron spokesman said in a statement that the company believes its agreement with Anadarko provides the best value and most certainty to Anadarko shareholders.

An Occidental spokeswoman said the company hopes Anadarko will move quickly to secure its "superior" transaction.

Shares of Occidental fell 1.5% in morning trading while shares of Anadarko declined 0.1%. Chevron's shares were unchanged.

Last week, Occidental offered Anadarko a cash-and-stock deal of $76 a share -- or about $11 a share more than the value of the Chevron transaction on the day it was announced, April 12. Occidental's offer would mean $38 in cash and 0.6094 of a share of Occidental stock per each of Anadarko's stock.

Anadarko had entered an agreement with Chevron to be acquired in a cash-and-stock deal where shareholders would receive $16.25 in cash and 0.3869 of a share of Chevron stock per each of Anadarko common shares.

Write to Bradley Olson at Bradley.Olson@wsj.com and Kimberly Chin at kimberly.chin@wsj.com

(END) Dow Jones Newswires

April 29, 2019 10:18 ET (14:18 GMT)

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