Could Occidental’s Offer for Anadarko Pit Buffett against Icahn?


May. 6 2019, Updated 9:37 a.m. ET

Occidental shareholders are concerned

Occidental Petroleum (OXY) has now made a more attractive offer for Anadarko Petroleum (APC). As compared to its previous offer, Occidental increased the cash portion of the deal to 78% from 50%. Many Occidental shareholders are not happy with Occidental’s offer, especially given Berkshire Hathaway’s (BRK-B) terms for the backing on the offer. Berkshire will receive a dividend of 8%, which is above the 5.3% common shareholders in Occidental will receive. Berkshire will also receive an option to buy 80 million more shares of Occidental Petroleum, which is further dilutive to the existing shareholders of the company.

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Shareholder vote

Moreover, with Warren Buffett backing the deal, the shareholder deal is less certain, which could give executives a way around investors’ concerns, one of which is the strain on the company’s balance sheet.

Warren Buffett versus Carl Icahn

Carl Icahn bought a stake in Occidental Petroleum. While it is still not clear if he’ll push for changes at the company, he would like to see the Occidental offer go to a shareholder vote if accepted, which could create a sort of clash between the two well-known investors, Icahn and Buffett. As Bloomberg reports, this would not be the first time that the two investors have clashed. Back in 2014, Icahn lambasted Buffett for not taking action in regards to Coca-Cola despite having significant clout at the company through his holding. Icahn is known for pushing for changes at the company for better shareholder value.

Icahn has many other investments in the energy sector (XLE) including CVR Energy (CVI), Diamondback Energy (FANG), Cheniere Energy (LNG), and Freeport McMoran (FCX).


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