Berkshire Hathaway to invest US$10b in Occidental Petroleum for Anadarko takeover

Warren Buffett, chairman and CEO of Berkshire Hathaway, speaks at the Fortune’s Most Powerful Women’s Summit in Washington October 13, 2015. — Reuters pic
Warren Buffett, chairman and CEO of Berkshire Hathaway, speaks at the Fortune’s Most Powerful Women’s Summit in Washington October 13, 2015. — Reuters pic

NEW YORK, April 30 — American mega-investor Warren Buffett’s Berkshire Hathaway will invest US$10 billion (RM41.4 billion) in Occidental Petroleum as the company battles to acquire rival Anadarko Petroleum, Occidental announced today.

Anadarko’s board had already approved an offer from Chevron when Occidental unveiled a higher bid last week, beginning a tug-of-war over the assets in the shale-rich Permian Basin in Texas.

“We have long believed that Occidental is uniquely positioned to generate compelling value from Anadarko’s highly complementary asset portfolio,” Vicki Hollub, Occidental’s president and chief executive, said in a statement.

“We are thrilled to have Berkshire Hathaway’s financial support of this exciting opportunity.”

Occidental’s proposed takeover valued Anadarko at US$76 a share, compared to the US$65 offered by Chevron on April 12. Occidental said it was disappointed that Anadarko had ignored its previous bids.

Anadarko yesterday agreed to resume talks with Occidental, after the board of directors declared that the rival offer “could reasonably be expected to result in a ‘Superior Proposal’” to Chevron’s offer.

Berkshire Hathaway is to receive US$10 billion in Occidental shares, with the option to buy 80 million more at US$62.50 a share, according to the Occidental statement.

But Chevron said today it stood by its initial offer.

“We believe our signed agreement with Anadarko provides the best value and the most certainty to Anadarko’s shareholders,” a Chevron spokesman said.

But the company indicated last week it could walk away from the deal if bidding drove the price up too high.

“We can practically say Chevron will get out of the race,” Gregori Volokhine of Meeshaert Financial Services told AFP.

“It’s not that it’s hard to fight Warren Buffett but this manoeuvre will give Anadarko a lot of confidence to accept the offer” from Occidental, he added.

Shares in Anadarko were 0.5 per cent lower toward 1500 GMT while Occidental had fallen an even steeper 1.7 per cent. Chevron was up 3.1 per cent. — AFP