Chevron departs with $1 billion deal-breaker fee
Last week, they walked away from the deal, this inevitably means that Occidental will merge with Anadarko once they overtook Chevron with an offer.
The Anadarko merger would have given the winning company a stronger foothold in the U.S. shale oil field in the Permian basin in Texas.
Chevron, however, did not leave empty-handed, they did come away with the $1 billion fee breakup which technically would be enough to buy another drill at the Permian Basin.
The decision by Chevron had an almost immediate effect on other oil and petroleum companies, most notably the shares of San Ramon falling 3%.
On Monday, Anadarko announced that their board had come to a unanimous decision that they felt that the Occidental bid was superior to the Chevron offer.
This comes after Occidental revised its bid to one worth $38 billion which was clearly superior to the $33 billion that Chevron offered originally.
Anadarko declared a term of reports that revealed their intentions to accept Occidentals offer if Chevron failed to offer one that was superior led to Chevron walking out.
The recent revision had one salient attractive feature to it, Occidental, no doubt fueled by the heavy funding from Berkshire Hathaway, a Warren Buffet company, proposed to pay 78% in cash and 22% in stock, which is a contrast to the 75% stock and 25% cash split from Chevron.
While it seems like Occidental has won this battle, the question many analysts are asking themselves is if the oil company has maybe overextended itself in its attempt to attain the company.
Can they make enough revenue to make up for the amount of money they will have spent on the deal? Time will reveal.