Carl Icahn Steps Up Attack on Occidental over Anadarko Deal

Carl Icahn’s opposition to Occidental-Anadarko deal

We discussed in Will Carl Icahn’s Lawsuit Bring Relief to Occidental Shareholders? that Icahn sued Occidental Petroleum (OXY) in May to gain access to corporate records related to what he believes is a hugely overpriced Anadarko deal (APC). As Reuters reported, his lawsuit calls Occidental’s purchase of Anadarko for $38 billion “fundamentally misguided and hugely overpriced.” Icahn is also concerned that if oil prices (XLE) sink going forward, it could endanger Occidental’s future after making such an expensive deal.

He had also signaled that he may try to replace Occidental’s board of directors and press for sale of assets. Chevron (CVX) was also initially in the bidding process for Anadarko, but Occidental topped its bid to seal the deal.

Warren Buffett’s backing

Occidental’s bid for Anadarko was also supported by Warren Buffett’s Berkshire Hathaway’s (BRK-B) $10 billion in financing. Berkshire will receive a dividend of 8%, which is above the 5.3% common shareholders Occidental will receive. Also, Berkshire’s option to buy 80 million more shares of Occidental Petroleum is further dilutive to the existing shareholders of the company.

Icahn steps up fight with Occidental

As the Wall Street Journal reported, in yet another escalation, Icahn is seeking to replace four Occidental directors. He believes that the board mismanaged its $38 billion deal to buy Anadarko Petroleum. He also said that the company’s pending deal implies a lack of “effective corporate governance” and is seeking to change the company’s charter to prevent it from doing a similar takeover again.