American oil and gas multinational Chevron has acquired all of the outstanding shares of hydrocarbon exploration company Anadarko for $50bn.
The stock and cash transaction for Anadarko’s shares is valued at $33bn, or $65 per share. Anadarko’s shareholders will receive $16.25 in cash and 0.3869 shares of Chevron for each Anadarko share under the terms of the agreement.
The acquisition of Anadarko is expected to enhance Chevron’s upstream portfolio as well as its positions in deepwater, shale and natural gas resource basins. Chevron is expected for benefit from in the Delaware Basin and the Gulf of Mexico, with the combination of the two companies extending Chevron’s offshore infrastructures.
Chevron will also gain a resource base in Mozambique to support growing global demand for liquefied natural gas (LNG), described by Chevron as “a very cost-competitive and well-prepared greenfield project” close to major markets.
As a result of predicted higher cash flows, Chevron plans to increase its share repurchase rate from $4bn to $5bn, increasing returns for its shareholders. Chevron also expects its shareholders to benefit from additional cash through reduced debt and spending.
Chevron chair and CEO Michael Wirth 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 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.”
Anadarko chair and CEO Al Walker said: “The strategic combination of Chevron and Anadarko will form a stronger and better company with world-class assets, people and opportunities.”
“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 transaction has been approved by the board of Directors of Chevron and Anadarko, and is expected to close in the second half of 2019, subject to approval from shareholders and regulators as well as other customary closing conditions.