(Bloomberg) – The Leaders of Occidental Petroleum Corp. According to activist investor Carl Icahn, they have hastily signed a $ 38 billion deal for Anadarko Petroleum Corp. completed to prevent the takeover itself.
Vicki Hollub, Occidental's Chief Executive Officer, and Eugene Batchelder, Chairman of Occidental, seem to have negotiated the "extremely risky" transaction because they feared their oil and gas explorer would be in the crosshairs of a potential buyer , Icahn said in a letter sent to the Occidental shareholders Monday.
"I believe that Hollub and Batchelder know what's good for them and their personal goals, but they do not care what's good for the shareholders," Icahn said in the letter, whose copy was reviewed by Bloomberg. "With [Occidental] weakened and mauled, Hollub and Batchelder were concerned that there would be an offer for the company that the shareholders would accept."
The letter is Icahn's latest salvo in the activist's attack on Occidental after he had successfully outbid Chevron's corp. for Anadarko in May, making it the largest deal in the oil industry for at least four years. Icahn, which owns $ 1.7 billion of Occidental, has denied funding for the transaction and the lack of shareholder approval.
Occidental urged shareholders to replace Icahn's efforts to replace four directors, not supporting shareholder interest. In addition, Robert Shearer, a former CEO of BlackRock Inc., was appointed to the Board earlier this month.
Hollub resisted the Icahn nominees on Monday in her own letter to shareholders, saying none of them had "skills superior to our existing directors." The deal, which is expected to close in the second half of the year, is expected to bring $ 3.5 billion in cost and investment synergies.
"Mr. Icahn's statements demonstrate that he does not understand or support the strategy and the financial benefits of the acquisition, and we believe that his Board nominations would affect our ability to successfully integrate Anadarko's valuable assets into our divestment strategy. and implement the debt relief plan and fulfill the full promise of this acquisition at this critical time, "she said. 19659009] The back and forth comes less than a week after Icahn has formally asked Occidental investors to help him replace four of the company's 10 directors and possibly go for a sale. Icahn had talked to Hollub several times over the past six weeks about his concerns about the Anadarko deal, he said in a statement last week.
Icahn said in an interview on Bloomberg television that he's trying to prevent Occidental from repeating mistakes Similar to the negotiations on the Anadarko deal. Hollub could have arranged the financing for the deal months in advance, but was "in a panic" when the need arose.
"You need someone like us or a voice on this body to keep those people honest," Icahn said. "The board made a deal that I think is ridiculous and you might panic again."
Hollub and Batchelder have a "tremendous track record, despite high pay," Icahn said in the letter. Occidental's board "stamped" the Anadarko deal and traded it too fast as it structured it to avoid shareholder voting.
Occidental executives, who had limited experience in mergers and acquisitions, overcharged their deal with Warren Buffett's Berkshire Hathaway to outbid Chevron as part of the $ 10 billion financing deal, said Icahn. Hollub was "arrogant" believing she could bargain with Buffett, he said.
"Buffett literally took her to the cleaning ladies," he said in a letter thanking him publicly!
Buffett will receive an 8% return on its preference shares to finance the deal plus common stock warrants, a similar structure that the financier had previously acquired in acquiring shares in Bank of America Corp. and Goldman had used Sachs Group Inc. Icahn claimed that at least one well-known major investor had provided the financing without the warrants.
Icahn submitted documents last week to obtain support from 20% of Occidental shareholders deadline to determine which investors would be entitled to vote on the replacement of directors. If this were to be achieved, Icahn would ask for her written consent for removal, which he calls a "lengthy and expensive" procedure.
But he said a change was necessary as the company's stock fell 33% since Hollub was named CEO in April 2016 when oil was trading at $ 45 a barrel and developed worse during the same period than its competitors. He said that despite a rise in oil prices, these declines had risen by 25% over the same period. The company has seen a market value loss of $ 12 billion since the first announcement of its purchase interest in Anadarko.
Occidental fell 0.3% to $ 52.15 at 14:09. in New York trading, bringing the company a market value of about $ 39 billion.
(Updates with Icahn's comments in paragraph nine, stock price in last paragraph.)
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