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Berkshire Hathaway Joins In on Oxy's Bid for Anadarko; $10B Investment

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Warren Buffett's company Berkshire Hathaway, Inc. has committed to invest a total of $10 billion in Occidental Petroleum should Oxy successfully acquire Anadarko Petroleum in the coming months.

The investment is contingent upon Occidental entering into and completing its proposed acquisition of Anadarko.

Oxy recently sweetened the pot with a new offer for Anadarko (who is currently in a pending merger agreement with Chevron). Anadarko has since resumed negotiations with Oxy.

Investment Details

Berkshire Hathaway will receive 100,000 shares of Cumulative Perpetual Preferred Stock with a liquidation value of $100,000 per share, together with a warrant to purchase up to 80.0 million shares of Occidental common stock at an exercise price of $62.50 per share. The preferred stock will accrue dividends at 8% per annum (or with respect to dividends that are accrued and unpaid, 9%).

On April 24, Occidental made a proposal to acquire Anadarko for $76.00 per share, comprised of $38.00 in cash and 0.6094 shares of Occidental common stock per Anadarko share. On April 29, Anadarko announced that its Board of Directors had determined that the proposal from Occidental could reasonably be expected to result in a Superior Proposal under its existing merger agreement and that it would engage with Occidental.

The preferred stock to be issued to Berkshire Hathaway will be redeemable for cash (in whole or in part) at the option of Occidental commencing on the tenth anniversary of issuance at a redemption price equal to 105% of the liquidation preference plus accumulated and unpaid dividends, if any. The preferred stock will also be mandatorily redeemable for cash (in whole or in part) upon certain specified capital return events. Dividends will be paid in cash or, at Occidental's option, in shares of Occidental common stock. The warrant to be issued with the preferred stock may be exercised in whole or in part and from time to time, until one year after the redemption of the preferred stock.

The preferred stock and the warrant are being issued and sold in a private offering.