US oil giant Chevron acquires rival for $33bn

/ Financial News / Tuesday, 16 April 2019 11:51

Oil behemoth Chevron has announced that it will acquire its smaller US rival Anadarko for a deal reportedly worth to be around $33 billion. The acquisition will significantly boost the company’s exploration and production holdings in its home market.

The cash-and-stock transaction is centered on Anadarko’s properties in the Permian Basin in Texas and the Gulf of Mexico. These are two locations in which Chevron is already a major player and where economies of scale can help drive added value with suppliers in key drilling and production operations.

In addition to this, Anadarko also has a handful of international ventures most notably a major liquefied natural gas project in Mozambique that Chevron has insisted would bolster one of its major global businesses. 

Chevron CEO Mike Wirth expressed his delight at the acquisition deal and said that it solidified its position in the US market.

He said, “This transaction builds strength on strength for Chevron. The combination of Anadarko's premier, high-quality assets with our advantaged portfolio strengthens our leading position in the Permian, builds on our deep-water Gulf of Mexico capabilities and will grow our LNG business."

For Chevron, the second-biggest US oil company after Exxon Mobil, the takeover of Anadarko marks its biggest deal since its purchase of Texaco, which closed in 2001.

In another transaction in 2005 Chevron bought Unocal for $18.3 billion after raising the price during a high-profile and public bidding war with China's CNOOC that drew interest from US policy and lawmakers in Washington.

The acquisition is composed of 75 percent stock and 25 percent cash, with Anadarko shareholders receiving 0.39 shares of Chevron and $16.25 in cash for each Anadarko share held. By combining the two companies, Chevron is projecting that it will cull $1 billion in costs.

Anadarko is perhaps best known for being a minority partner on BP's ill-fated and infamous Macondo project in Gulf of Mexico, which was the site of the worst offshore oil spill in US history in 2010 following a well explosion that killed 11 people.

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