The Faber Report

Anadarko likely to deem Occidental's buyout offer superior to Chevron's bid on Monday: Sources

Key Points
  • Occidental launched a rival bid after Chevron reached a deal to buy Anadarko last month.
  • Occidental revised its proposal on Sunday, offering to pay mostly cash for Anadarko.
  • Chevron will have four days to put another offer on the table if Anadarko's board determines the Occidental bid is superior.
Anadarko likely to deem Occidental's buyout offer superior to Chevron's, sources tell CNBC

Anadarko Petroleum's board of directors is likely to determine on Monday that Occidental Petroleum's buyout offer is superior to the agreement the board reached last month to sell Anadarko to Chevron, sources tell CNBC's David Faber.

The decision would flip the momentum of the bidding war in Occidental's favor and put pressure on Chevron to sweeten its $33 billion offer.

Occidental has taken several steps to outmatch the much larger Chevron since launching its $38 billion rival offer nearly two weeks ago. On Sunday, Occidental revised its bid, offering to purchase Anadarko for 78% cash and 22% stock, compared with its earlier 50-50 cash-and-stock proposal.

Increasing the cash component of the deal means Occidental will not have to hold a shareholder vote on the acquisition, making it more certain that the driller could complete the deal.

Occidental was able to offer more cash after securing a $10 billion preferred stock investment from Warren Buffett's Berkshire Hathaway. Occidental also inked a deal to sell Anadarko's African oil and natural gas assets to French oil major Total for $8.8 billion, which would also fund the cash component of the acquisition.

If Anadarko's board does deem Occidental's bid superior, Chevron will have four days to put another offer on the table. Anadarko would have to pay Chevron a $1 billion breakup fee if its board ultimately chooses Occidental's offer.

Shares of Occidental initially fell following Faber's report, but were last up more than 1.6% after the driller announced first quarter earnings that beat Wall Street's expectations. Chevron's stock price was up about 1.1%.

Anadarko's stock price spiked nearly $3 per share, or about 4%. The jump may signal the market expects Chevron to counter Occidental's revised offer.

Anadarko did not return a request for comment. A spokesperson for Chevron referred inquiries to Anadarko.