Chevron has a major decision to make after Anadarko decided to ditch a deal with the oil major and sell its business to Occidental.
Mizuho Securities also anticipates a counter offer from Chevron because "Chevron has some major structural reasons to want Anadarko." That would cause Occidental to raise its own bid, but from there, Mizuho's lead oil analyst, Paul Sankey, thinks things could get interesting.
Occidental is mostly focused on Anadarko's Permian assets, while Chevron has its eye on a bigger part of the portfolio. Sankey speculates that Chevron could waive the $1 billion breakup fee in exchange for a major asset swap with Occidental. Most investors expect Chevron to put in just one more bid — and one that matches Occidental's offer to pay 78% cash and 22% stock for Anadarko, says Morgan Stanley. The Chevron-Anadarko transaction is structured as a 25% cash and 75% stock deal.
Once Chevron puts in its bid, Morgan Stanley thinks Occidental his limited room to maneuver. Raising its bid much further would raise concerns that it is taking on too much borrowed capital.
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