Chevron Corporation announced that it has agreed to acquire all of the outstanding shares of Anadarko Petroleum Corporation.
Chevron will acquire $33 billion, or $65 per share, in a stock and cash transaction. Anadarko shareholders will receive 0.3869 shares of Chevron and $16.25 in cash for each Anadarko share.
The total enterprise value of the transaction is $50 billion.
The acquisition of Anadarko will significantly enhance Chevron’s portfolio and further strengthen its leading positions in large, attractive shale, deepwater and natural gas resource basins.
“This transaction builds strength on strength for Chevron,” said Chevron 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.”
San Ramon, California-based Chevron explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and lubricants; manufactures and sells petrochemicals and additives; generates power; and develops and deploys technologies that enhance business value in every aspect of the company’s operations.
“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,” said Wirth.
Anadarko’s mission is to deliver a competitive and sustainable rate of return to shareholders by exploring for, acquiring and developing oil and natural gas resources vital to the world’s health and welfare. As of year-end 2018, the company had 1.47 billion barrels-equivalent of proved reserves, making it one of the world’s largest independent exploration and production companies.
“The strategic combination of Chevron and Anadarko will form a stronger and better company with world-class assets, people and opportunities,” said Anadarko Chairman and CEO Al Walker. “I have tremendous respect for Mike [Wirth] and his leadership team and believe Chevron’s strategy, scale and operational capabilities will further accelerate the value of Anadarko’s assets.”
The benefits of the transaction include:
- Anadarko’s assets will enhance Chevron’s portfolio across a diverse set of asset classes, including Shale & Tight, Deepwater and LNG.
- The transaction is expected to achieve run-rate cost synergies of $1 billion before tax and capital spending reductions of $1 billion within a year of closing.
- Chevron expects the transaction to be accretive to free cash flow and earnings per share one year after closing, at $60 Brent.
- Chevron plans to divest $15 to $20 billion of assets between 2020 and 2022. The proceeds will be used to further reduce debt and return additional cash to shareholders.
- As a result of higher expected free cash flow, Chevron plans to increase its share repurchase rate from $4 billion to $5 billion per year upon closing the transaction.
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 to be led by Michael Wirth as Chairman and CEO. Chevron will remain headquartered in San Ramon, California.