Warren Buffett backs Occidental bid for Anadarko with $10bn

Concerns raised over size of debt to be take on

Warren Buffett, CEO of Berkshire Hathaway.

Warren Buffett, CEO of Berkshire Hathaway.

 

Warren Buffett’s Berkshire Hathaway has pledged to invest $10 billion (€9 billion) in Occidental Petroleum to back its $55 billion bid for rival Anadarko Petroleum, in a vote of confidence for the ambitious deal.

Berkshire has said that if the takeover goes through, it will invest $10 billion in new Occidental preferred shares that will pay an 8 per cent dividend. In addition, it will have a warrant to buy up to 80 million in common stock, about 11 per cent of the total equity.

Vicki Hollub, Occidental’s chief executive, said in a statement: “We have long believed that Occidental is uniquely positioned to generate compelling value from Anadarko’s highly complementary asset portfolio. We are thrilled to have Berkshire Hathaway’s financial support of this exciting opportunity.”

She added: “We look forward to engaging with Anadarko’s board of directors to deliver this superior transaction to our respective shareholders.”

Anadarko is on course to accept the offer from Occidental, which gatecrashed its previously agreed $50 billion sale to Chevron.

Anadarko said on Monday that its board had “unanimously determined” that Occidental’s cash-and-stock offer would probably be deemed superior to the Chevron deal.

However, Occidental’s bid has raised concerns about the size of the debt that the company would have to take on. – Copyright The Financial Times Limited 2019