Occidental to Sell Anadarko's Africa Assets to Total if It Wraps Deal With Anadarko -- Update

By Bradley Olson and Cara Lombardo 

Occidental Petroleum Corp. plans to sell Anadarko Petroleum Corp.'s Africa assets to Total SA if it completes a deal for the company.

Occidental is in a contest with larger rival Chevron Corp. to buy Anadarko, with each company bidding in excess of $30 billion. The announcement Sunday is part of a plan by Occidental to sell assets to improve its balance sheet if it can complete the purchase.

The assets, which would sell for $8.8 billion, include Anadarko's multibillion-dollar Mozambique project and other developments in Algeria, Ghana and South Africa.

"The $8.8 billion value to be received for Africa represents an attractive value based on our extensive evaluation over the last 18 months," said Occidental Chief Executive Vicki Hollub.

Occidental previously had disclosed plans for roughly $10 billion to $15 billion in asset sales following a deal for Anadarko.

"These are world class assets with great upside, and we welcome the opportunity to leverage our expertise in [liquefied natural gas] and deepwater developments as well as our long history of operating in Africa," said Patrick Pouyanné, chairman and CEO of Total.

The potential transaction with Total marked another step by Occidental to shore up its bid for Anadarko, after the company last week received $10 billion in backing for the potential deal from Warren Buffett's Berkshire Hathaway Inc.

If Occidental's proposed acquisition of Anadarko goes through, Berkshire will receive 100,000 preferred shares in Occidental that pay an 8% annual dividend and a warrant to purchase $5 billion in Occidental common stock.

The Berkshire funds would make it possible for Occidental to avoid a shareholder vote on the transaction. While Occidental has signaled that it believes it could win shareholder support, the company still moved to do the deal in an effort to strengthen its offer. Anadarko's deal with Chevron doesn't require the approval of Chevron shareholders.

Spokesmen for Chevron and Anadarko didn't immediately respond to requests for comment. Chevron previously has said its deal "provides the best value and the most certainty to Anadarko's shareholders." Anadarko's board is currently weighing Occidental's offer.

Some Occidental shareholders have expressed concerns about the transaction and the potential that they won't have a say on the deal. T. Rowe Price Group Inc. said last week that the deal would push Occidental into new business lines and weaken its balance sheet. The asset manager also signaled that if the transaction doesn't come up for a vote, T. Rowe will vote against Occidental's directors at its annual meeting May 10.

Chevron and Occidental have both seen their shares decline as the push to win Anadarko continues, a factor that has brought down the value of a potential transaction from either party. Chevron is down about 7% since April 11, and Occidental is down about 15% since then.

Occidental's offer is worth almost $6 billion more than Chevron's as of Friday's closing price. Under the April 12 deal with Chevron, Anadarko shareholders would receive 0.3869 share of the San Ramon, Calif., oil giant and $16.25 for each Anadarko share. That was $65 a share on April 12 but has since fallen to $61.62 a share for a total value of $30.93 billion as of Friday's close.

For Occidental's proposed transaction, which the Anadarko board is evaluating, Anadarko shareholders would receive $38 in cash and 0.6094 Occidental share. That was $76 a share on April 24, when Occidental made its rival offer public. It has since fallen to $73.71 a share, or about $36.8 billion.

Write to Bradley Olson at [e-mail] and Cara Lombardo at [e-mail]

(END) Dow Jones Newswires

May 05, 2019 16:48 ET (20:48 GMT)

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