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Item 1.01.
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Entry into a Material Definitive Agreement.
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Merger Agreement
On May 9, 2019, Occidental Petroleum Corporation (“Occidental”), Baseball Merger Sub 1, Inc., a Delaware corporation and
wholly owned indirect subsidiary of Occidental (“Merger Subsidiary”), and Anadarko Petroleum Corporation (“Anadarko”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, subject to the terms and conditions of
the Merger Agreement, Merger Subsidiary will merge with and into Anadarko (the “Merger”), with Anadarko as the surviving corporation. As a result of the Merger, Anadarko will become a wholly owned indirect subsidiary of Occidental.
At the effective time of the Merger (the
“Effective Time”)
, each outstanding share of common stock of Anadarko (subject to limited exceptions, including shares with respect to which dissenters’
rights have been validly exercised in accordance with Delaware law) will be converted into the right to receive $59.00 in cash (without interest) and 0.2934 of a share of common stock of Occidental, plus cash in lieu of any fractional Occidental
shares that otherwise would have been issued (the “Merger Consideration”), and subject to potential further adjustments as specified in the Merger Agreement.
Pursuant to the Merger Agreement, at the Effective Time, Anadarko in-the-money stock options will be cashed out based on the cash value of the Merger Consideration (equal
to $59.00 plus 0.2934 times the closing share price of Occidental common stock on the last trading day prior to closing), less the applicable option exercise price; Anadarko out-of-the-money stock options will be cancelled for no consideration;
Anadarko restricted stock unit awards will convert into Occidental restricted cash/restricted stock unit awards based on the value of the Merger Consideration, which will be subject to the same terms and conditions of the original Anadarko equity
award; Anadarko restricted stock awards will convert into Occidental restricted cash/restricted stock awards based on the value of the Merger Consideration, which will be subject to the same terms and conditions of the original Anadarko equity
award; Anadarko performance unit awards will vest at closing and convert into the right to receive an amount of cash equal to $76.00 per share, multiplied by 200% of the target number of shares covered by such performance unit awards; and each
Anadarko director deferred share will convert into the right to receive the Merger Consideration.
The board of directors of Anadarko has unanimously approved the Merger Agreement and resolved to recommend the adoption of the
Merger Agreement by Anadarko stockholders, who will be asked to vote on the adoption of the Merger Agreement at a special stockholders meeting.
The completion of the Merger is subject to satisfaction or waiver of certain customary mutual closing conditions, including (1)
the receipt of the required approval from Anadarko stockholders, (2) the expiration or termination of the waiting period under the Hart-Scott-Rodino Act, as amended (the “HSR Act”), applicable to the Merger, (3) the absence of any order or law
prohibiting consummation of the Combination, (4) the effectiveness of the Registration Statement on Form S-4 to be filed by Occidental pursuant to which the shares of Occidental common stock to be issued in connection with the Merger will be
registered with the Securities and Exchange Commission (the “SEC”) and (5) the authorization for listing on the New York Stock Exchange of the shares of Occidental common stock to be issued in connection with the Merger. The obligation of each
party to consummate the Merger is also conditioned upon the other party’s representations and warranties being true and correct (subject to certain materiality exceptions) and the other party having performed in all material respects its
obligations under the Merger Agreement.
The Merger Agreement contains customary representations and warranties of Occidental and Anadarko relating to their respective
businesses, financial statements and public filings, in each case generally subject to customary materiality qualifiers. Additionally, the Merger Agreement provides for customary pre-closing covenants of Occidental and Anadarko, including a
covenant of Anadarko relating to conducting its business in the ordinary course, and covenants of each party to refrain from taking certain actions without the other party’s consent. Occidental and Anadarko also agreed to use their respective best
efforts to cause the Merger to be consummated and to obtain expiration or termination of the waiting period under the HSR Act, subject to certain exceptions, including that Occidental is not required to take or authorize any action that would
reasonably be expected to have a material adverse effect (after giving effect to any reasonably expected proceeds of any divestiture or sale of assets) on the financial condition, business, assets or continuing results of operations of Anadarko
(or, in the case of actions with respect to Occidental’s pre-closing assets, on a company of Anadarko’s size).
The Merger Agreement provides that, during the period from the date of the Merger Agreement until the Effective Time, Anadarko is
subject to certain restrictions on its ability to solicit alternative acquisition proposals from third parties and to provide non-public information to third parties and to engage in negotiations with third parties regarding alternative acquisition
proposals, subject to customary exceptions. Subject to certain exceptions, Anadarko is required to call a meeting of its stockholders to vote on a proposal to adopt the Merger Agreement and to recommend that its stockholders adopt the Merger
Agreement.
The Merger Agreement contains termination rights for each of Occidental and Anadarko, including, among others, (1) if the
consummation of the Merger does not occur on or before February 9, 2020, subject to extension to May 9, 2020 for certain limited purposes, including obtaining U.S. antitrust clearance, and (2) subject to certain conditions, if Anadarko wishes to
terminate the Merger Agreement to enter into a definitive agreement with respect to a Superior Proposal (as such term is defined in the Merger Agreement). Upon termination of the Merger Agreement under specified circumstances, including the
termination by Occidental in the event of a change of recommendation by the board of directors of Anadarko or by Anadarko to enter into a definitive agreement with respect to a Superior Proposal, Anadarko would be required to pay Occidental a
termination fee of $1,000,000,000. The Merger Agreement also provides that, in connection with a termination of the Merger Agreement by Anadarko due to an uncured or incurable breach by Occidental, Occidental will be required to reimburse Anadarko
for the $1,000,000,000 termination fee that was paid by Anadarko to Chevron Corporation (“Chevron”) in connection with the termination of the previously announced agreement and plan of merger, dated as of April 11, 2019, by and among Chevron,
Justify Merger Sub 1 Inc., Justify Merger Sub 2 Inc. and Anadarko.
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to
the Merger Agreement, which is attached hereto as Exhibit 2.1 and is incorporated by reference herein.
The Merger Agreement has been included to provide investors with information regarding its terms. It is not intended to provide
any other factual information about Occidental, Anadarko or their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the Merger Agreement were made solely for purposes of the Merger Agreement and as of
specific dates, were solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating
contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors.
Investors are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties
thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be
fully reflected in Occidental’s or Anadarko’s public disclosures.
Occidental expects to finance the cash portion of the Merger Consideration with the proceeds of debt and equity financing,
including proceeds from the previously disclosed $10 billion equity investment by Berkshire Hathaway Inc. In connection with its entry into the Merger Agreement, Occidental entered into a debt commitment letter, dated May 5, 2019, with Bank of
America, N.A (“BofA”), Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc. (“CGMI”), pursuant to which, subject to the terms and conditions set forth therein, BofA and CGMI (on behalf of itself and certain
affiliates) committed to provide a 364-day senior unsecured bridge loan facility in an aggregate principal amount of up to $21.8 billion.