​Chevron walks away from US$33 billion deal to buy Anadarko

Anadarko operations in Colorado. Image: Anadarko

Chevron Corporation is abandoning its $33 billion offer for Anadarko Petroleum Corporation, the culmination of a month-long bidding war in which Occidental Petroleum Corporation prevailed over a rival five times its size.

The most ambitious foray of Chevron chief executive officer Mike Wirth’s tenure ended Thursday after the world’s third-largest oil explorer by market value elected not to sweeten an offer that fell out of favour with Anadarko directors.

Chevron said it will collect a $1 billion termination fee and plans to increase its share buybacks by 25 per cent.

Anadarko’s board embraced the Occidental proposal as superior on May 6, giving Chevron up to four days to come back with a revised offer.

Anadarko was looking for Chevron to match or exceed Occidental’s proposal, people familiar with the matter said Wednesday. However, Chevron indicated that topping its rival’s offer was too risky.

“Winning in any environment doesn’t mean winning at any cost,” Wirth said in a statement. “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.”

Chevron’s departure leaves Occidental free to proceed with its $38 billion takeover of Anadarko that will double the acquirer’s daily output to the equivalent of more than 1.3 million bbls, on par with OPEC members Angola or Libya.

The outcome also vindicates Occidental chief executive officer Vicki Hollub, whose opening appeals to Anadarko were pilloried by prominent investors and analysts as an overreach.

© 2019 Bloomberg L.P.

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