Occidental Chief Defends Anadarko Deal to Shareholders
May 10 2019 - 3:00PM
Dow Jones News
By Bradley Olson
Occidental Petroleum Corp. Chief Executive Vicki Hollub defended
her aggressive and ultimately successful pursuit of Anadarko
Petroleum Corp. in her first public remarks to investors after
striking the $38 billion deal.
A day after winning a battle for Anadarko that pitted the
smaller Occidental against giant Chevron Corp., Ms. Hollub spoke at
the company's annual meeting in Houston and took umbrage at those
who confused Occidental's "determination with desperation," she
said. "We approached this deal from a position of strength."
Noting that she was going off script in discussing her strategy
during negotiations, Ms. Hollub said the company believed strongly
that it would operate the Anadarko assets "better than anyone
else."
"There's a lot to look forward to for us," she said. "It's a
unique, transformational opportunity."
Ms. Hollub also explained the decision to seek $10 billion in
financing from Warren Buffett's Berkshire Hathaway Inc. to help
build a war chest for the deal, a move whose terms some
shareholders have criticized as too expensive. She said the company
would more than make up for the cost once it absorbs Anadarko's
assets.
"We had to have those funds," she said. "The timing was critical
for us."
Anadarko on Thursday accepted Occidental's $38 billion offer
after Chevron bowed out of the bidding. Ms. Hollub had initially
appeared to lose out to Chevron, which struck a $33 billion deal
for Anadarko last month. But she went public with a higher offer on
April 24 and ultimately persevered after lining up Berkshire's
support and striking a deal to sell $8.8 billion in Anadarko's
Africa assets to France's Total SA to strengthen her hand.
The Anadarko deal displeased some investors, who noted their
discontent by voting against Occidental's board on Friday. The
board received the support of a range of 70% to 82% of votes cast
from shareholders, according to a preliminary tally.
Mutual fund giant T. Rowe Price Group Inc. was among the major
investors who voted against the board this year, objecting to
Occidental's decision to strike a deal without direct shareholder
approval. By tapping Berkshire's funding, Ms. Hollub was able to
sidestep a vote on the deal by reducing the amount of existing
shares issued, a decision Ms. Hollub defended as a way to avoid
hurdles and ensure an Occidental offer was not inferior to
Chevron's.
The support for directors this year was the lowest at Occidental
since 2013, when former Chairman Ray Irani stepped down after more
than three fourths of the company's investors voted to remove him.
Mr. Irani had angered some shareholders who were concerned he
played a role in trying to oust the company's chief executive at
the time, and had earlier been criticized for outsize
compensation.
Write to Bradley Olson at Bradley.Olson@wsj.com
(END) Dow Jones Newswires
May 10, 2019 14:45 ET (18:45 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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