The deal will have Chevron using a mix of stock and cash to purchase Anadarko Petroleum. This will have investors in Anadarko Petroleum receiving 0.3869 shares of CVX stock and $16.25 in cash for each share of APC stock that they hold. The deal has CVX using a mix of 75% stock and 25% cash to fund the purchase.
The offer from Chevron has it valuing APC stock at $65 per share, based on the closing price of CVX stock on Thursday. This represents a roughly 39% premium over the stock’s closing price yesterday.
Chevron notes that it is expecting to see several benefits from acquiring Anadarko Petroleum. Among these are yearly run-rate synergies of around $2 billion. The company is also expecting the acquisition to be accretive to free cash flow and earnings one year after close.
CVX also points out that the deal with Anadarko Petroleum also has the approval from both companies’ Boards of Directors. The deal still needs approval from APC shareholders. It also needs approval from regulators and to complete other customary closing conditions.
So long as everything goes well, Chevron and Anadarko Petroleum are expecting the deal to close during the second half of the year.
CVX stock was down 4% and APC stock was up 33% as of noon Friday. CVX stock is currently up 13% since the start of the year and APC stock is up 4% year-to-date.
As of this writing, William White did not hold a position in any of the aforementioned securities.