Chevron Corporation has announced that it has entered into a definitive agreement with Anadarko Petroleum Corporation to acquire all of the outstanding shares of Anadarko in a stock and cash transaction valued at USD 33 billion, or USD 65 per share. Based on Chevron’s closing price on April 11, 2019 and under the terms of the agreement, Anadarko shareholders will receive 0.3869 shares of Chevron and USD 16.25 in cash for each Anadarko share. The total enterprise value of the transaction is USD 50 billion.
The acquisition of Anadarko will significantly enhance Chevron’s already advantaged upstream portfolio and further strengthen its positions in large, attractive shale, deepwater and natural gas resource basins. Furthermore, Western Midstream Partners, LP 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,” says 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 US 2 billion, and will be accretive to free cash flow and earnings one year after close,” Wirth concludes.
“The strategic combination of Chevron and Anadarko will form a stronger and better company with world-class assets, people and opportunities,” says 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.”
The acquisition consideration is structured as 75% stock and 25% cash, providing an overall value of USD 65 per share based on the closing price of Chevron stock on April 11, 2019. In aggregate, upon closing of the transaction, Chevron will issue approximately 200 million shares of stock and pay approximately USD 8 billion in cash. Chevron will also assume estimated net debt of USD 15 billion. Total enterprise value of USD 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.