Chevron to acquire Anadarko Petroleum for $33 billion (CVX press release)
SAN RAMON, California – Chevron announced that it has entered into a definitive agreement with Anadarko Petroleum to acquire all of the outstanding shares of Anadarko in a stock and cash transaction valued at $33 billion, or $65/share. Based on Chevron’s closing price on April 11th, 2019 and under the terms of the agreement, Anadarko shareholders will receive 0.3869 shares of Chevron and $16.25 in cash for each Anadarko share. The total enterprise value of the transaction is $50 billion.
The acquisition of Anadarko will significantly enhance Chevron’s upstream portfolio and further strengthen its leading positions in large, attractive shale, deepwater and natural gas resource basins. Furthermore, Western Midstream Partners, is a successful midstream company whose assets are well aligned with the combined companies’ upstream positions, which should further enhance their economics and execution capabilities.
“This transaction builds strength on strength for Chevron,” said Chevron’s Chairman and CEO Michael Wirth. “The combination of Anadarko’s premier, high-quality assets with our advantaged portfolio strengthens our leading position in the Permian, builds on our deepwater Gulf of Mexico capabilities and will grow our LNG business. It creates attractive growth opportunities in areas that play to Chevron’s operational strengths and underscores our commitment to short-cycle, higher-return investments.”
“This transaction will unlock significant value for shareholders, generating anticipated annual run-rate synergies of approximately $2 billion and will be accretive to free cash flow and earnings one year after close,” Wirth concluded. “The strategic combination of Chevron and Anadarko will form a stronger and better company with world-class assets, people and opportunities,” said Anadarko Chairman and CEO Al Walker. “I have tremendous respect for Mike and his leadership team and believe Chevron’s strategy, scale and operational capabilities will further accelerate the value of Anadarko’s assets.”
Read for Bloomberg's take: Chevron buys Anadarko in $33 billion bet on shale, LNG
Transaction Benefits
Strong Strategic Fit. Anadarko’s assets will enhance Chevron’s portfolio across a diverse set of asset classes, including:
Shale and Tight. The combination of the two companies will create a 75-mi-wide corridor across the most attractive acreage in the Delaware basin, extending Chevron’s leading position as a producer in the Permian basin.
Deepwater. The combination will enhance Chevron's existing high-margin position in the deepwater Gulf of Mexico and extend its deepwater infrastructure network.
LNG. Chevron will gain another world-class resource base in Mozambique to support growing LNG demand. Area 1 is a cost-competitive and well-prepared greenfield project close to major markets.
Transaction Details
The acquisition consideration is structured as 75% stock and 25% cash, providing an overall value of $65/share based on the closing price of Chevron stock on April 11th, 2019. In aggregate, upon closing of the transaction, Chevron will issue approximately 200 million shares of stock and pay approximately $8 billion in cash. Chevron will also assume estimated net debt of $15 billion. Total enterprise value of $50 billion includes the assumption of net debt and book value of non-controlling interest.
The transaction has been approved by the Boards of Directors of both companies and is expected to close in the second half of the year. The acquisition is subject to Anadarko shareholder approval. It is also subject to regulatory approvals and other customary closing conditions.
Upon closing, the Company will continue be led by Michael Wirth as Chairman and CEO. Chevron will remain headquartered in San Ramon, California.
