Markets

Carl Icahn calls Occidental's deal for Anadarko one of the worst he's ever seen

Key Points
  • Activist investor Carl Icahn says Occidental stock is down 41% under CEO Vicki Hollub.
  • Icahn was a vocal critic of Occidental Petroleum's deal to buy Anadarko Petroleum, a purchase seen by the longtime activist investor as "hugely overpriced."
  • Icahn also blames shareholders for a lack of input.
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Carl Icahn calls Occidental's Anadarko deal 'one of the worst I've ever seen'

Billionaire investor Carl Icahn told CNBC on Thursday Occidental's $38 billion deal to acquire Anadarko "is one of the worst I've ever seen."

"And I've seen a lot of stuff that has gone over the many years we've been involved," the 83-year-old Icahn said in a telephone interview with Scott Wapner. "You take a look at OXY and you take a look at Vicki Hollub, who says that's she's done a great job and is interested in the long-term benefits to the company."

Since Hollub started as CEO, "the value of Occidental has dropped $23.7 billion, down 41%," he continued, adding that major energy ETFs are down far less over the same period. Since May 1, 2016, the Energy Select Sector SPDR is down more than 12%, while Occidental has fallen nearly 40%; the S&P 500 is up 42%.

Icahn was a vocal critic of Occidental Petroleum's deal to buy Anadarko Petroleum, a purchase seen by the longtime activist investor as "hugely overpriced." Expensive financing, he and other stakeholders argued, could put the Houston-based oil giant at risk if crude prices fall.

But Icahn's qualms with the deal put him at odds with another famous investor, Warren Buffett. The Omaha-based value hunter contributed $10 billion in financing for the Occidental bid via Berkshire Hathaway, Buffett's holding conglomerate.

As part an agreement struck with Occidental's management, Buffett receives 100,000 shares of cumulative perpetual preferred stock with a value of $100,000 per share and an annual dividend of 8%. Icahn scrutinized the arrangement, saying Buffett tricked Hollub into a bad deal.

"They didn't have to give Warren — I mean Warren did a great job for himself and Berkshire ... but they didn't have to give him a $1.5 billion gift," Icahn said in the interview on CNBC's "Halftime Report."

Hollub "ran to Omaha to make this deal ... [she] was with Buffett for 90 minutes," he said. "Usually Buffett goes with Charlie Munger before he does a deal. He didn't even bother on this one. He just did the deal in 90 minutes. The whole thing is a travesty."

Representatives of Berkshire and Buffett did not immediately respond to CNBC's requests for comment. Occidental declined to comment on Icahn's criticism.

Icahn owned $1.6 billion in Occidental shares, or nearly 5% of the oil company as of May 30. The longtime activist investor — known for agitating for change at his investments — also blasted the deal for its lack of shareholder input.

The Occidental-Anadarko deal closed on Thursday in a transaction valued at $55 billion, including the assumption of Anadarko's debt. Anadarko shareholders are receiving $59 in cash and 0.2934 shares of Occidental common stock per share of Anadarko common stock.