12 April 2019
DETAILS
- Strategic fit that enhances
Chevron’s advantaged portfolio - Provides $2 billion in anticipated
annual operating cost and capital synergies - Accretive to free cash flow and earnings
one year after close - Share repurchase annual target
increases by 25 percent to $5 billion
Chevron Corporation (NYSE: CVX) announced today
that it has entered into a definitive agreement with
Anadarko Petroleum Corporation (NYSE: APC)
to acquire all of the outstanding shares of Anadarko
in a stock and cash transaction
valued at $33 billion, or $65 per share.
Based on Chevron’s closing price on April 11th, 2019
and under the terms of the agreement,
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.
Transaction Benefits
Strong Strategic Fit: Anadarko’s assets will enhance
Chevron’s portfolio across a diverse set of asset classes,
including:
Shale & Tight – The combination of the two companies
will create a 75-mile-wide corridor
across the most attractive acreage in the Delaware basin,
extending Chevron’s leading position
as a producer in the Permian.
Deepwater – The combination will enhance
Chevron's existing high-margin position
in the deepwater Gulf of Mexico (GOM),
where it is already a leading producer,
and extend its deepwater infrastructure network.
LNG – Chevron will gain another world-class resource base
in Mozambique to support growing LNG demand.
Area 1 is a very cost-competitive and
well-prepared greenfield project close to major markets.
Significant Operating and Capital Synergies:
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.
Accretive to Free Cash Flow and EPS:
Chevron expects the transaction to be accretive
to free cash flow and earnings per share
one year after closing, at $60 Brent.
Opportunity to High-Grade Portfolio: 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.
Increased Shareholder Returns:
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.
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Chevron’s Chairman and CEO
Michael Wirth
“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,
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Anadarko Chairman and CEO
Al Walker
“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.”
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Advisors
Credit Suisse Securities (USA) LLC is acting
as financial advisor to Chevron.
Paul, Weiss, Rifkind, Wharton & Garrison LLP
and Shearman & Sterling LLP are acting
as legal advisor to Chevron.
Evercore and Goldman Sachs & Co. LLC are acting
as financial advisors to Anadarko.
Wachtell, Lipton, Rosen & Katz and Vinson & Elkins LLP
are acting as legal advisors to Anadarko.
WWW.CHEMWINFO.COM BY KHUN PHICHAI