Chevron drops US$33b bid for Anadarko, ceding key oil asset to Occidental

[NEW YORK] The energy giant Chevron on Thursday quit a bidding war for Anadarko Petroleum, ending the industry's fiercest takeover battle in 15 years and leaving Occidental Petroleum, a much smaller rival, poised to become the dominant force in the largest oil field in the United States.

Chevron's decision to drop its US$33 billion bid for Anadarko and instead walk away with a US$1 billion breakup fee came less than a month after the two companies had agreed to a deal.

That agreement was upended when Occidental stepped in a short time later and offered to acquire Anadarko for US$38 billion, most of it cash. Its bid was fortified with a commitment from Berkshire Hathaway to invest US$10 billion in the company.

By acquiring Anadarko, Occidental will almost double in size and gain a significant foothold in the Permian Basin, which straddles West Texas and New Mexico and has been the principal driver of the shale-oil revolution that has made the United States a major oil exporter over the last three years. The deal will also make Occidental a major producer in the Gulf of Mexico offshore field.

"Winning in any environment doesn't mean winning at any cost," said Michael Wirth, Chevron's chief executive, in a statement announcing the company's decision to abandon its bid. "Cost and capital discipline always matter."

NYTimes