Reject Icahn’s bid, Oxy urges

OIl company tells its shareholders meeting not needed

Occidental Petroleum is telling its shareholders to reject a bid by corporate activist Carl Icahn to call a special board meeting in an effort to replace nearly half of the Oxy board.

Last week, Icahn started the process to call a special meeting, which would require support from 20 percent of the Oxy shares, with the aim of replacing nearly half the directors. Icahn holds a nearly 5 percent stake in the Houston oil company

The move by Icahn, a famed corporate raider and activist inves

tor, was prompted by his unhappiness with Oxy’s pending $38 billion acquisition of The Woodlandsbased Anadarko Petroleum and the hit to the value of his holdings. Oxy’ shares have plunged 25 percent since April, when it first made public its pursuit of Anadarko and its extensive holdings in the Permian Basin in West Texas.

The billionaire investor also sued Occidental in May.

In a filing with the U.S. Securities and Exchange Commission, Oxy told its shareholders that Icahn’s efforts “are not in the best interests of Occidental or its stockholders.” The company added that if shareholders had already agreed to back Icahn’s move, that they could still revoke their support.

“The board believes that stockholder interests would be best served by focusing on completion of the pending acquisition by Occidental of Anadarko,” Oxy stated.

Bidding war

Icahn alleges Oxy took a win-atall-costs approach in its bidding war with Chevron to acquire Anadarko, destroying much of the value of its stock in the process and letting its shareholders suffer the consequences. He contends the company, which will significantly increase its debt with the acquisition, is betting too much that oil prices will rise.

He aims to replace four of the nine board members and set up a set up strategic review committee, arguing the company “has a lack of effective corporate governance” and board members “made a number of mistakes in how and at what cost they pursued the acquisition of Anadarko.”

In May, shareholders bucked the wishes of the Occidental Petroleum board by supporting a proposal to lower the threshold for calling a special board meeting to 15 percent from 20 percent. But the vote wasn’t binding and Oxy hasn’t adopted the change.

‘Fiasco,’ says Icahn

Icahn last week called the Anadarko deal a “fiasco” in which the Oxy management and board disregarded their shareholders and placed an unnecessarily risky bet on the future of the company.

To secure the financing for the deal, Oxy Chief Executive Vicki Hollub led a whirlwind tour to Paris to sell Anadarko’s Africa assets to the French energy major Total for $8.8 billion, and then to Nebraska to convince Warren Buffett to commit $10 billion to help finance the Anadarko deal in exchange for a stake in the combined company.

To gain Anadarko, Oxy had to outbid the California energy major Chevron, which is much bigger. But Oxy was willing to offer $5 billion more than Chevron in part because the company is one of the most efficient operators in the Permian, where Anadarko has extensive holdings, Hollub said.

She estimated Oxy, with Anadarko’s acreage, can save $10 billion in the Permian over time versus its peers. “In the end, this is going to be a great thing for our shareholders, and they’re starting to see that,” Hollub said in May.