Carl Icahn Sues Occidental, Calling $38 billion Anadarko Deal 'Fundamentally Misguided'

By Christopher M. Matthews 

Activist investor Carl Icahn sued Occidental Petroleum Corp. Thursday, calling its $38 billion deal to buy Anadarko Petroleum Corp. "fundamentally misguided" and saying a sale of Occidental might be better for shareholders.

Mr. Icahn, who disclosed he holds $1.6 billion in Occidental shares, is seeking records in connection with the Anadarko deal through a lawsuit filed in Delaware. The lawsuit conceded that the deal is likely to close, but said Mr. Icahn is seeking information to determine whether to rally shareholders to call for a special meeting to elect new board members.

The lawsuit states that the Anadarko deal is "hugely overpriced" and puts Occidental at risk if oil prices fall. Mr. Icahn added Occidental should explore selling itself, arguing that it would be in the best interest of shareholders.

Mr. Icahn is considering pushing for a special meeting "to potentially elect new directors to ensure that Occidental is being run in the interests of its stockholders going forward, and not in the interests of directors and officers who appear to be interested in growth for growth's sake," the lawsuit said.

Occidental and Anadarko didn't immediately respond to requests for comment Thursday. Occidental's shares were up slightly midday Thursday, while Anadarko's were slightly down.

Occidental topped Chevron Corp. in a bidding war for Anadarko earlier this month, winning prized assets in the heart of the U.S. oil boom: the Permian Basin of West Texas and New Mexico. Occidental's emergence as the likely victor means it is now poised to swallow a company nearly its own size as it bulks up in the region.

Chevron had agreed to purchase Anadarko for about $33 billion on April 12, but Occidental offered the oil company $38 billion on April 24 and then sealed its bid by boosting the cash portion of its offer. Occidental's deal with Anadarko is expected to close in the second half of 2019.

Occidental's aggressive efforts to win Anadarko included lining up $10 billion in financial backing, from Warren Buffett's Berkshire Hathaway Inc., via the sale of preferred stock -- and included a deal to sell Anadarko's Africa assets for $8.8 billion to French oil giant Total SA.

Mr. Icahn questioned both the Berkshire financing and the Total deal in the lawsuit, saying both were rushed and costly to Occidental. Mr. Icahn also said the transactions showed the inexperience of Occidental CEO Vicki Hollub in mergers and acquisitions.

"[A] ninety-minute deal 'negotiation' with one of history's canniest investors, is no place to gain M&A experience -- at least if you care about protecting your stockholders," the lawsuit said, referring to the talks with Mr. Buffett.

Write to Christopher M. Matthews at [e-mail]

(END) Dow Jones Newswires

May 30, 2019 14:27 ET (18:27 GMT)

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