Chevron vs. Occidental Offers to Anadarko

Chevron vs. Occidental Offers to Anadarko
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Chevron vs. Occidental Offers to Anadarko
Why does Anadarko (APC) CEO Al Walker keep rejecting Occidental’s (OXY) $76 offer only to accept Chevron’s $65 offer?
According to components of the proposals by the two companies to Anadarko, it was clear to Anadarko that Chevron’s offer had more benefits than Occidental’s offer. The reason for accepting Chevron’s offer was based on the additional benefits that came along with it apart from the stated value of the shares. Some of the most significant determinants of the offer acceptance were the cash and equity components, shareholder votes, and dependence of the financial leverage of the companies on the deal. According to Mayfield et al. (2021), it was clear that Chevron offered more enticing additional benefits such as the promised premiums to the shareholders of Anadarko. Chevron had a more appealing solution of attaining cost and capital synergies compared to Occidental. Through the cost and capital synergies, the company would be able to improve value addition of Anadarko through development of Anadarko’s Permian acreage and high-grading their twin portfolio. This proposal for development differed from what Occidental had promised, since their plan to lower capital spending was by lowering near-term growth rate.
Consequently, Anadarko having assessed Occidental’s proposal, believed that the company’s acquisition proposal was meant to be a transformational deal, which was to be determined by the shareholder vote. Therefore, it was most likely that the acquisition terms of Occidental would be affected by shareholder vote since t...