Chevron to pocket $1bn as it pulls out of race to acquire Anadarko

In a move which has won it much praise, energy giant Chevron has walked away from an agreement to acquire E&P company Anadarko Petroleum after it decided not to match a $38bn bid from Occidental Petroleum Corporation.

Chevron had entered into an agreement to acquire Anadarko last month in a stock and cash transaction worth $33bn, however Occidental moved in with a higher bid, backed by a $10bn cash injection from billionaire Warren Buffet’s Berkshire Hathaway.

In a statement, Chevron said it will not make a counterproposal and will allow the four-day match period to expire, and anticipates that Anadarko will terminate the agreement. The termination will see Anadarko required to pay a $1bn termination fee to Chevron.

Michael Wirth, chairman and CEO of Chevron, said: “Winning in any environment doesn’t mean winning at any cost. 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 move saw Chevron’s share price rise 3.14% yesterday, as the company won praise from analysts for not sacrificing its finances by entering a bidding war.

Grant Rowles

Grant spent nine years at Informa Group based in London, Sydney, Hong Kong and Singapore. He gained strong management experience in publishing, conferences and awards schemes in the shipping and legal areas, working on a number of titles including Lloyd's List. In 2009 Grant joined Seatrade responsible for the commercial development of Seatrade’s Asia products. In 2012, with Sam Chambers, he co-founded Asia Shipping Media.
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