One stock analyst revealed on Monday that flight tracking data showed Occidental Petroleum’s corporate jet had flown to Omaha over the weekend, prompting them to speculate that Oxy might be trying to bring Warren Buffett into the deal to help finance its takeover of Anadarko Petroleum.
As it so happens, that assessment was absolutely spot on.
According to CNBC, a day after Anadarko said it was leaning toward Oxy’s higher bid, Buffett has confirmed that Berkshire is getting involved in the bidding war between Oxy and Chevron. Berkshire has committed to invest $10 billion in Occidental Petroleum contingent on the company completing the takeover of Anadarko.
Buffett’s backing will undoubtedly strengthen Oxy’s hand as its squares off with the much larger Chevron, which could still up its offer for Anadarko. With Buffett backing Oxy, it’s more likely that Chevron will walk away from the deal with the $1 billion breakup fee it would be owed by Anadarko. Though Chevron still has the financial heft to see the deal through if it commits to doing so.
Here’s how the deal is structured (Per CNBC):
- Berkshire will receive 100,000 shares of cumulative perpetual preferred stock with a value of $100,000 a share.
- The conglomerate also gets a warrant to purchase up to 80 million shares of Occidental at an exercise price of $62.50 a share.
- The preferred stock will accrue dividends at 8% annually.
Oxy CEO Vicki Hollub, who had pledged to sell off some $15 billion in assets to help finance the acquisition, said she was “thrilled” to have Buffett on board.
Berkshire’s involvement in the deal will undoubtedly be widely discussed at Berkshire’s annual shareholder meeting this weekend.
via ZeroHedge News http://bit.ly/2XROngU Tyler Durden