Anadarko Faces Investor Pressure to Explain Occidental Snub

Anadarko Petroleum Corp. is under pressure from investors to explain why it agreed to a takeover offer from Chevron Corp. despite it being substantially lower than Occidental Petroleum Corp.’s $38 billion proposal.

Occidental went public with its offer Wednesday and said it was essentially the same one made in January last year. Yet despite several further offers from Occidental as recently as this month, Anadarko’s board agreed April 12 to Chevron’s deal, which is substantially cheaper and comes with $1 billion break fee.

Anadarko has said it’s evaluating the Occidental proposal. It reported first-quarter results Friday, several days earlier than originally scheduled, but there won’t be the usual earnings conference call with analysts and investors, leaving them waiting for answers. Anadarko didn’t immediately respond to requests for comment.

Anadarko needs “to have a very good reason why turning away a 15-20 percent premium for the Oxy bid in favor of Chevron is the right thing to do for shareholders,” said Noah Barrett, an energy analyst at Janus Capital Management, which manages $328 billion. It’s not clear “why they were so willing to accept the Chevron bid when in theory there was this more attractive bid out there that they just kind of ignored.”

Unlike the Chevron deal, Occidental’s proposed acquisition will require investor approval. Janus has shares in all three companies involved in the tussle for Anadarko, but its fund managers don’t vote as a block, instead making decisions based on their specific fund’s holdings.

Anadarko closed at $71.77 a share in New York on Thursday while the Chevron and Occidental bids — which are both in cash and stock — had a per-share value of $61.87 and $75.69 respectively.

“We are disappointed with the fact that they signed the deal with Chevron prior to fully vetting the Occidental deal,” said Michael Roomberg, a fund manager at Miller/Howard Investments Inc., which manages $5 billion. “But we need give Anadarko a chance to officially respond” and see the board’s full thinking around the various offers, he said.

Roomberg also said he sees “strong merits” in the Occidental offer, especially given the opportunity for asset sales which could lower the acquirer’s debt burden over time. Anadarko’s Mozambique assets — which include a massive natural gas export project — could raise $3 billion without lowering earnings, while its Gulf of Mexico and midstream operations would also be coveted by rivals, he said.

Still, he’s willing to give Anadarko’s board the benefit of the doubt for now. “It’s likely Chevron comes back with a higher bid,” he added.

Chevron Chief Executive Officer Mike Wirth is scheduled to speak on a first-quarter conference call Friday and is likely to be quizzed on whether he’d consider raising the offer.