This summary highlights selected information contained in this proxy statement/prospectus and does not contain all the information that may be important to you. Occidental and Anadarko urge you to read carefully this proxy statement/prospectus in its entirety, including the annexes. Additional important information, which Occidental and Anadarko also urge you to read, is contained in the documents incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page . Unless stated otherwise, all references in this proxy statement/prospectus to Occidental are to Occidental Petroleum Corporation, all references to Anadarko are to Anadarko Petroleum Corporation and all references to the merger agreement are to the Agreement and Plan of Merger, dated as of May 9, 2019, by and among Occidental Petroleum Corporation, Baseball Merger Sub 1, Inc. and Anadarko Petroleum Corporation, a copy of which is attached as Annex A to this proxy statement/prospectus.
Information about the Companies
Occidental
Occidental is an international oil and gas exploration and production company with operations in the United States, Middle East and Latin America. Headquartered in Houston, Occidental is one of the largest U.S. oil and gas companies, based on equity market capitalization. Occidental’s principal businesses consist of three segments as follows:
Oil and Gas—This segment explores for, develops and produces oil and condensate, natural gas liquids (“NGLs”) and natural gas. Occidental’s oil and gas assets are located in some of the world’s highest-margin basins and are characterized by an advantaged mix of short- and long-cycle, high-return development opportunities. In the United States, Occidental holds a leading position in the Permian Basin. Other core operations are in the Middle East (Oman, United Arab Emirates (“UAE”) and Qatar) and Latin America (Colombia).
Chemical (OxyChem)—This segment primarily manufactures and markets basic chemicals and vinyls. OxyChem is a leading North American manufacturer of PVC resins, chlorine and caustic soda − key building blocks of products such as pharmaceuticals, water treatment chemicals and durable, long-life plastics. OxyChem has manufacturing facilities in the United States, Canada and Latin America.
Midstream and Marketing—This segment purchases, markets, gathers, processes, transports and stores oil, condensate, NGL, natural gas, carbon dioxide and power. It also trades around its assets, including transportation and storage capacity, and invests in entities that conduct similar activities. Also within the midstream and marketing segment is Oxy Low Carbon Ventures (“OLCV”). OLCV seeks to capitalize on Occidental’s enhanced oil recovery leadership by developing carbon capture, utilization and storage projects that source anthropogenic carbon dioxide and promote innovative technologies that drive cost efficiencies and grow Occidental’s business while reducing emissions.
Occidental is incorporated in Delaware. Its principal executive offices are located at 5 Greenway Plaza, Suite 110, Houston, Texas 77046 and its telephone number is (713) 215-7000. Occidental’s website address is www.oxy.com. Information contained on Occidental’s website does not constitute part of this proxy statement/prospectus. Occidental’s common stock is publicly traded on the NYSE, under the ticker symbol “OXY”. Additional information about Occidental is included in documents incorporated by reference in this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page .
Anadarko
Anadarko is among the world’s largest independent exploration and production companies, with approximately 1.5 billion barrels of oil equivalent (“BOE”) of proved reserves at December 31, 2018. Anadarko’s asset portfolio combines cash-generating conventional oil developments in the Gulf of Mexico, Algeria and Ghana with a large inventory of significant and proven high-growth unconventional resources in the U.S. onshore. Anadarko’s U.S. onshore assets include the Delaware and Denver-Julesburg (“DJ”) basins and an emerging play in the Powder River basin. Anadarko’s asset portfolio also includes a world-class natural-gas discovery in Mozambique as well as other worldwide exploration and development opportunities.
On February 28, 2019, Anadarko completed the previously announced contribution and sale of substantially all of its midstream assets to Western Midstream Partners, LP, a publicly traded limited partnership and
consolidated subsidiary of Anadarko and formerly known as Western Gas Equity Partners, LP. Due to this contribution and sale, as of the filing on May 8, 2019 of its Quarterly Report on Form 10-Q for the three months ended March 31, 2019, Anadarko no longer reports an Other Midstream segment and now has two reporting segments as follows:
Exploration and Production—This segment is engaged in the exploration, development, production and sale of oil, natural gas and NGLs and in advancing its Mozambique LNG project toward a final investment decision (“FID”) in the first half of 2019.
WES Midstream—This segment engages in gathering, processing, treating, and transporting Anadarko and third-party oil, natural gas and NGL production, as well as gathering and disposal of produced water. The WES Midstream segment consists of assets owned by Western Midstream Partners, LP.
Anadarko is incorporated in Delaware. Anadarko’s corporate headquarters is located at 1201 Lake Robbins Drive, The Woodlands, Texas 77380-1046, and its telephone number is (832) 636-1000. Anadarko’s website address is www.anadarko.com. Information contained on Anadarko’s website does not constitute part of this proxy statement/prospectus. Anadarko’s common stock is publicly traded on the NYSE under the ticker symbol “APC”. Additional information about Anadarko is included in documents incorporated by reference in this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page .
Merger Subsidiary
Merger Subsidiary, an indirect wholly owned subsidiary of Occidental, is a Delaware corporation incorporated on April 5, 2019 for the purpose of effecting the merger. Merger Subsidiary has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement, including the preparation of applicable regulatory filings in connection with the merger. The principal executive offices of Merger Subsidiary are located at 5 Greenway Plaza, Suite 110, Houston, Texas 77046, and its telephone number is (713) 215-7000.
On May 9, 2019, Occidental, Merger Subsidiary and Anadarko entered into the merger agreement, which provides that upon the terms and subject to the conditions set forth therein and in accordance with the DGCL, Merger Subsidiary will merge with and into Anadarko, with Anadarko continuing as the surviving corporation and an indirect wholly owned subsidiary of Occidental.
In the merger, each share of Anadarko common stock that is issued and outstanding immediately prior to the effective time of the merger (other than (i) cancelled shares, (ii) certain shares of Anadarko common stock subject to stock-based awards that will be treated in the manner described under the heading “The Merger—Treatment of Anadarko Stock Options and Other Stock-Based Awards” and (iii) dissenting shares (if any)) will be converted into the right to receive the merger consideration, consisting of $59.00 in cash (as such amount of cash may potentially be adjusted pursuant to the merger agreement as described below, the “per share cash consideration”), without interest, and 0.2934 (as such amount may potentially be adjusted pursuant to the merger agreement as described below, the “exchange ratio”) of a validly issued, fully paid and non-assessable share of Occidental common stock (such cash consideration and stock consideration together, as they may potentially be adjusted pursuant to the merger agreement as described below, the “merger consideration”). If the merger would otherwise result in the issuance of shares of Occidental common stock (including shares that would be deliverable pursuant to converted stock-based awards pursuant to the merger agreement) in excess of 19.99% of the outstanding shares of Occidental common stock immediately prior to the closing of the merger (the “share cap”), (i) the exchange ratio will be reduced by the smallest number (rounded up to the nearest 0.0001) that causes the total number of shares of Occidental common stock (including shares that would be deliverable pursuant to converted stock-based awards pursuant to the merger agreement) issuable in the merger to not exceed the share cap (the “exchange ratio reduction number”) and (ii) the per share cash consideration will be increased by the amount in cash equal to (x) the exchange ratio reduction number multiplied by (y) the Parent Closing Price.
The exchange ratio is otherwise fixed and will not be adjusted to reflect changes in the stock price of either company prior to the closing of the merger. The exchange ratio will, however, be adjusted appropriately to fully
reflect the effect of any reclassification, recapitalization, stock split or combination, exchange or readjustment of shares, or any stock dividend thereon, with respect to outstanding shares of capital stock of either Occidental or Anadarko with a record date between the date of the merger agreement and the completion of the merger. No fractional shares of Occidental common stock will be issued in connection with the merger. Each holder of Anadarko common stock that otherwise would have been entitled to receive a fractional share of Occidental common stock immediately prior to the effective time of the merger will receive an amount in cash, without interest, rounded to the nearest cent, in lieu of such fractional share. The value of such cash payment will be calculated by the exchange agent and will represent the holder’s proportionate interest in a trust of proceeds established from the open-market sale of that number of shares of Occidental common stock equal to the excess of (i) the aggregate number of shares of Occidental common stock delivered to the exchange agent by Occidental pursuant to the terms of the merger agreement over (ii) the aggregate number of whole shares of Occidental common stock distributed to the holders of certificates or book-entry shares previously representing shares of Anadarko common stock pursuant to the merger agreement.
Occidental stockholders will continue to own their existing shares of Occidental common stock, the form of which will not be changed by the transaction.
Treatment of Anadarko Stock Options and Other Stock-Based Awards
Anadarko Stock Options. Upon completion of the merger, each outstanding Anadarko stock option will be cancelled and converted into the right to receive a cash amount equal to the product of (i) the excess, if any, of (1) the Option Consideration over (2) the per share exercise price of such Anadarko stock option; and (ii) the aggregate number of shares of Anadarko common stock subject to such Anadarko stock option. Each Anadarko stock option with an exercise price equal to or greater than the Option Consideration will be cancelled and terminated, without any payment in respect thereof.
Anadarko RSU Awards. Upon completion of the merger, each outstanding Anadarko RSU award will convert into an Occidental restricted stock/cash unit award with respect to both (i) the number (rounded to the nearest whole number) of shares of Occidental common stock determined by multiplying (x) the number of shares of Anadarko common stock subject to such Anadarko RSU award by (y) the exchange ratio and (ii) the U.S. dollar amount (rounded to the nearest whole cent) determined by multiplying (1) the number of shares of Anadarko common stock subject to such Anadarko RSU award by (2) the per share cash consideration. Such converted award will otherwise continue on the same terms and conditions as were applicable under such Anadarko RSU award, including any provisions for acceleration of vesting. Such terms and conditions include “double-trigger” protection of the converted award, meaning that upon certain qualifying terminations of employment during the applicable protection period following the closing of the merger, the award will immediately vest and become unrestricted as of such termination.
Anadarko RS Awards. Upon completion of the merger, each outstanding Anadarko RS award will convert into an Occidental restricted stock/cash award with respect to both (i) the number (rounded to the nearest whole number) of shares of Occidental common stock determined by multiplying (x) the number of shares of Anadarko common stock subject to such Anadarko RS award by (y) the exchange ratio and (ii) the U.S. dollar amount (rounded to the nearest whole cent) determined by multiplying (1) the number of shares of Anadarko common stock subject to such Anadarko RS award by (2) the per share cash consideration. Such converted award will otherwise continue on the same terms and conditions as were applicable under such Anadarko RS award, including any provisions for acceleration of vesting. Such terms and conditions include “double-trigger” protection of the converted award, meaning that upon certain qualifying terminations of employment during the applicable protection period following the closing of the merger, the award will immediately vest and become unrestricted as of such termination.
Anadarko PU Awards. Upon completion of the merger, each outstanding Anadarko PU award will immediately vest and will be cancelled and converted into the right to receive a cash amount equal to the product of (i) 200% of the target number of shares of Anadarko common stock subject to such Anadarko PU award multiplied by (ii) $76.00, less applicable tax withholdings. This amount will be payable on the earliest date that would not result in the imposition of any tax under Section 409A of the Code.
Anadarko Deferred Share Awards. Upon completion of the merger, each outstanding Anadarko deferred share award will be cancelled and converted into the right to receive the merger consideration in respect of each share of Anadarko common stock subject to such Anadarko deferred share award. This amount will be payable
within five business days following the completion of the merger or, if later, the earliest date that would not result in the imposition of tax under Section 409A of the Code.
For a more complete discussion of the treatment of Anadarko stock options and other Anadarko stock-based awards, see “The Merger—Treatment of Anadarko Stock Options and Other Stock-Based Awards” beginning on page .
Recommendations of the Anadarko Board of Directors
After careful consideration, the Anadarko Board unanimously recommends that holders of Anadarko common stock vote “FOR” the merger proposal.
After careful consideration, the Anadarko Board unanimously recommends that holders of Anadarko common stock vote “FOR” the merger-related compensation proposal.
For a more complete description of the Anadarko Board’s reasons for the transaction and the recommendation of the Anadarko Board, see “The Merger—Occidental’s Rationale for the Transaction” and “The Merger—Recommendations of the Anadarko Board of Directors and Its Reasons for the Transaction” beginning on pages and 55, respectively.
Opinions of Anadarko’s Financial Advisors
Opinion of Evercore Group L.L.C.
Pursuant to an engagement letter dated as of February 15, 2019, Anadarko engaged Evercore Group L.L.C. (“Evercore”) to act as its financial advisor in connection with a study of potential strategic alternatives available to Anadarko, including a possible sale of Anadarko. As part of this engagement, Anadarko requested that Evercore evaluate the fairness of the merger consideration, from a financial point of view, to the holders of the shares of Anadarko common stock.
At a meeting of the Anadarko Board held on May 9, 2019, Evercore rendered to the Anadarko Board its oral opinion, subsequently confirmed in writing, that as of May 9, 2019 and based upon and subject to the assumptions, limitations, qualifications and conditions described in Evercore’s written opinion, the merger consideration was fair, from a financial point of view, to the holders of Anadarko common stock entitled to receive such merger consideration.
The full text of the written opinion of Evercore, dated as of May 9, 2019, which sets forth, among other things, the procedures followed, assumptions made, matters considered and qualifications and limitations on the scope of review undertaken in rendering its opinion, is attached as Annex B to this proxy statement/prospectus and is incorporated by reference in its entirety into this proxy statement/prospectus. You are urged to read this opinion carefully and in its entirety. Evercore’s opinion was addressed to, and provided for the information and benefit of, the Anadarko Board in connection with their evaluation of the merger. The opinion does not constitute a recommendation to the Anadarko Board or to any other person in respect of the merger, including as to how any holder of shares of Anadarko common stock should vote or act in respect of the merger. Evercore’s opinion does not address the relative merits of the merger as compared to other business or financial strategies that might be available to Anadarko, nor does it address the underlying business decision of Anadarko to engage in the merger.
For further information, see “The Merger—Opinions of Anadarko’s Financial Advisors—Opinion of Evercore Group L.L.C.” beginning on page and the full text of the written opinion of Evercore attached as Annex B to this proxy statement/prospectus.
Opinion of Goldman Sachs & Co. LLC
At a meeting of the Anadarko Board, Goldman Sachs & Co. LLC (“Goldman Sachs”) rendered to the Anadarko Board its oral opinion, subsequently confirmed by delivery of a written opinion, dated May 9, 2019, to the Anadarko Board, to the effect that, as of the date of Goldman Sachs’ written opinion and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the merger consideration to be paid to the holders (other than Occidental, Berkshire Hathaway and their respective affiliates) of shares of Anadarko common stock pursuant to the merger agreement was fair from a financial point of view to such holders.
The full text of the written opinion of Goldman Sachs, dated May 9, 2019, which sets forth the assumptions made, procedures followed, matters considered, qualifications and limitations on the review undertaken in connection with the opinion, is attached to this proxy statement/prospectus as Annex C. The summary of Goldman Sachs’ opinion contained in this proxy statement/prospectus is qualified in its entirety by reference to the full text of Goldman Sachs’ written opinion. Goldman Sachs’ advisory services and opinion were provided for the information and assistance of the Anadarko Board in connection with its consideration of the merger and the opinion does not constitute a recommendation as to how any Anadarko stockholder should vote with respect to the merger or any other matter.
For more information, see “The Merger—Opinions of Anadarko’s Financial Advisors—Opinion of Goldman Sachs & Co. LLC” beginning on page and the full text of the written opinion of Goldman Sachs attached as Annex C to this proxy statement/prospectus.
Interests of Directors and Executive Officers of Anadarko in the Merger
You should be aware that some of the directors and executive officers of Anadarko have interests in the merger that are different from, or are in addition to, the interests of stockholders generally. These interests include the following:
| • | Executive officers and directors of Anadarko have arrangements with Anadarko that provide for certain benefits upon completion of the merger and/or if their employment or service is terminated under certain circumstances following the completion of the merger, including (i) in the case of executive officers, severance and accelerated vesting of certain equity awards, and (ii) in the case of non-executive directors, distribution of deferred share awards. |
| • | Executive officers and directors of Anadarko have rights to indemnification, advancement of expenses and directors’ and officers’ liability insurance that will survive the completion of the merger. |
The Anadarko Board was aware of these additional interests of their directors and executive officers and considered these potential interests, among other matters, in evaluating and negotiating the merger agreement and the merger, in approving the merger agreement and in recommending the applicable merger-related proposals.
For a further discussion of the interests of Anadarko’s directors and executive officers in the merger, see “The Merger—Interests of Directors and Executive Officers of Anadarko in the Merger” beginning on page .
Material U.S. Federal Income Tax Consequences of the Merger
The merger will be treated as a taxable transaction for U.S. federal income tax purposes. Therefore, a U.S. holder (as defined below in the section entitled “The Merger—Material U.S. Federal Income Tax Consequences—General”) generally will recognize capital gain or loss equal to the difference between (i) the sum of the cash and the fair market value of any shares of Occidental common stock received by such U.S. holder in the merger and (ii) the U.S. holder’s adjusted tax basis in its Anadarko common stock.
Except in certain circumstances described in “The Merger—Material U.S. Federal Income Tax Consequences—The Merger”, a Non-U.S. holder (as defined below in the section entitled “The Merger—Material U.S. Federal Income Tax Consequences—General”) generally will not be subject to U.S. federal income or withholding tax on any gain recognized on the exchange of Anadarko common stock for any shares of Occidental common stock and cash in the merger.
In certain circumstances, Anadarko stockholders who expect to own an equal or greater percentage interest in Occidental following the merger than their percentage interest in Anadarko prior to the merger, taking into account the application of certain constructive ownership rules, may have tax consequences that differ materially from those described above as a result of the application of Section 304. As described further below under “The Merger—Material U.S. Federal Income Tax Consequences—The Merger—Special Consequences of the Merger to Holders of Anadarko Common Stock That Also Own Occidental Common Stock”, such stockholders may be required to include the entire amount of the consideration received as dividend income. Non-U.S. holders may be subject to U.S. federal income and withholding tax on such dividend income. In addition, withholding agents may withhold on consideration payable to all Non-U.S. holders because they may not be able to determine whether any particular Non-U.S. holder is subject to withholding as a result of these rules. Any such stockholders who expect to own an equal or greater percentage interest in Occidental following the merger than their
percentage interest in Anadarko prior to the merger and all Non-U.S. holders should consult their own tax advisors regarding the application of Section 304 to the merger.
Please refer to “The Merger—Material U.S. Federal Income Tax Consequences—The Merger” contained in this proxy statement/prospectus for a description of the material U.S. federal income tax consequences of the merger. Determining the actual tax consequences of the merger to you may be complex and will depend on your specific situation. You are urged to consult your tax advisor for a full understanding of the tax consequences of the merger to you.
Accounting Treatment of the Merger
The merger will be accounted for as an acquisition of Anadarko by Occidental under the acquisition method of accounting in accordance with accounting principles generally accepted in the U.S. (“GAAP”). For additional information, see “The Merger—Accounting Treatment of the Merger” beginning on page .
Litigation Relating to the Merger
On May 30, 2019, Anadarko received a demand letter from counsel to a purported Anadarko stockholder, seeking inspection of Anadarko’s books and records pursuant to Section 220 of the DGCL. On May 9, 2019, Anadarko received a demand letter from counsel to a different purported Anadarko stockholder, seeking inspection of Anadarko’s books and records pursuant to Section 220 of the DGCL.
On May 30, 2019, a complaint was filed in the Court of Chancery of the State of Delaware by purported Occidental stockholders High River Limited Partnership, Icahn Partners Master Fund LP and Icahn Partners LP, seeking inspection of Occidental’s books and records pursuant to Section 220 of the DGCL. On June 14, 2019, Occidental filed an answer to the complaint in the Court of Chancery of the State of Delaware.
Under Delaware law, if the merger is completed, holders of Anadarko common stock who do not vote in favor of the adoption of the merger agreement and who otherwise comply with the requirements and procedures of Section 262 of the DGCL will be entitled to seek appraisal for, and obtain payment in cash for the judicially determined fair value of, their shares of Anadarko common stock, in lieu of receiving the merger consideration. The “fair value” could be higher or lower than, or the same as, the merger consideration. A copy of the full text of Section 262 of the DGCL is included as Annex D to this proxy statement/prospectus. Anadarko stockholders are encouraged to read Section 262 of the DGCL carefully and in its entirety. Moreover, due to the complexity of the procedures for exercising the right to seek appraisal, Anadarko stockholders who are considering exercising that right are encouraged to seek the advice of legal counsel. Failure to comply with Section 262 of the DGCL may result in loss of the right of appraisal. For a more detailed description of Anadarko stockholder’s appraisal rights, see “The Merger—Appraisal Rights” beginning on page .
Regulatory Approvals Required for the Merger
The merger is subject to the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), under which Occidental and Anadarko may not complete the merger until notification and report forms are furnished to the Antitrust Division of the U.S. Department of Justice (“DOJ”) and the U.S. Federal Trade Commission (“FTC”) and the HSR Act waiting period is terminated or expires. On May 23, 2019, Occidental and Anadarko each filed their respective requisite notification and report form under the HSR Act with the DOJ and the FTC. The FTC granted early termination of the applicable waiting period under the HSR Act on June 3, 2019.
Conditions to Completion of the Merger
The parties expect to complete the merger after all of the conditions to the merger in the merger agreement are satisfied or waived, including after the merger agreement has been adopted by the stockholders of Anadarko. The parties currently expect to complete the transaction in the second half of 2019. However, it is possible that factors outside of each company’s control could require them to complete the transaction at a later time or not to complete it at all.
In addition to the approval of the merger proposal by Anadarko stockholders and the expiration or termination of the applicable waiting period under the HSR Act, each as described above, each party’s obligation to complete the merger is also subject to the satisfaction (or, to the extent permitted by law and in accordance with the merger agreement, waiver) of other conditions, including: the effectiveness of the registration statement on Form S-4 of which this proxy statement/prospectus forms a part (and the absence of any stop order by the SEC), approval of the listing on the NYSE of the Occidental common stock to be issued in the merger, the absence of an injunction prohibiting the merger, the accuracy of the representations and warranties of the other party under the merger agreement (subject to the materiality standards set forth in the merger agreement), the performance by the other party of its respective obligations under the merger agreement in all material respects and delivery of an officer’s certificate by the other party certifying satisfaction of the two preceding conditions.
Neither Occidental nor Anadarko can be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the merger, see “The Merger Agreement—Conditions to Completion of the Merger” beginning on page .
Financing of the Merger and Treatment of Existing Debt
Occidental’s obligation to close the merger is not conditioned on its ability to obtain financing. Occidental and Merger Subsidiary have represented to Anadarko that proceeds from the debt and equity financing described below, together with cash and marketable securities of Occidental, will be sufficient to enable Occidental to pay at the closing of the merger the cash portion of the merger consideration and to consummate the transactions contemplated by the merger agreement. Occidental estimates that the total amount of cash required to complete the transactions contemplated by the merger, including the cash portion of the merger consideration and payment of fees, expenses and other related amounts incurred in connection with the merger, will be approximately $30.3 billion. Occidental expects to finance the cash portion of the merger consideration and these fees, expenses and amounts with the proceeds of debt and equity financing, including proceeds from the Berkshire Hathaway investment described below.
In connection with its entry into the merger agreement, Occidental entered into a second amended and restated debt commitment letter, dated May 9, 2019 (the “debt commitment letter”), with Citigroup Global Markets Inc. (“CGMI”), Bank of America, N.A. (“BofA”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (together with its assignee, BofA Securities, Inc., “BAML”), pursuant to which, subject to the terms and conditions set forth therein, CGMI (on behalf of itself and certain affiliates) and BofA (collectively, the “initial bridge commitment parties”) committed to provide a 364-day senior unsecured bridge loan facility in an aggregate principal amount of up to $21.8 billion. Such commitments were reduced by an aggregate principal amount of $8.8 billion, to an aggregate principal amount of $13.0 billion, upon Occidental’s entry into the term loan credit agreement described below and will be further reduced to the extent that Occidental obtains certain other long-term debt financing or debt financing commitments, completes certain issuances of equity, equity-linked or hybrid debt-equity securities or completes certain asset sales (subject to customary reinvestment rights), including asset sales pursuant to the Total transaction. On June 3, 2019, Occidental and the initial bridge commitment parties entered into a joinder agreement to the debt commitment letter (the “bridge joinder agreement”), with certain additional commitment parties (the “additional bridge commitment parties”). The bridge joinder agreement amended the debt commitment letter and reallocated the commitments of the initial bridge commitment parties to fund loans under the bridge loan facility among the initial bridge commitment parties and the additional bridge commitment parties (collectively, the “bridge commitment parties”). The bridge commitment parties’ obligations to fund the bridge loan facility are subject to several limited conditions as set forth in the debt commitment letter, including, among others, the completion of the merger, the absence of a material adverse effect (as defined in the merger agreement) on Anadarko, the accuracy in all material respects of certain representations and warranties related to Anadarko, as set forth in the merger agreement, and to Occidental, the absence of certain events of default and the delivery of certain financial statements of Occidental and Anadarko.
On June 3, 2019, Occidental entered into an $8.8 billion term loan credit agreement (the “term loan credit agreement”) with Citibank, N.A., as agent, and certain financial institutions party thereto, as lenders (the “term loan lenders”), pursuant to which, subject to the terms and conditions set forth therein, the term loan lenders committed to provide (i) a 364-day senior unsecured term loan facility in an aggregate principal amount of up to $4.4 billion and (ii) a two-year senior unsecured term loan facility in an aggregate principal amount of up to
$4.4 billion, for the purposes of financing the merger and paying related fees and expenses. The term loan lenders’ obligations to fund term loans under the term loan credit agreement are subject to several limited conditions as set forth in the term loan credit agreement, including, among others, the completion of the merger, the absence of a material adverse effect (as defined in the merger agreement) on Anadarko, the accuracy in all material respects of certain representations and warranties related to Anadarko, as set forth in the merger agreement, and to Occidental, the absence of certain events of default and (to the extent also provided to the lead arrangers under the bridge loan facility) the delivery of certain financial statements of Occidental and Anadarko. The term loan credit agreement contains certain customary covenants and events of default, including a customary negative pledge and a covenant that Occidental will maintain, as of the last day of each fiscal quarter, a ratio not in excess of 0.65 to 1.00 of consolidated debt to total capitalization (as such terms are defined in the term loan credit agreement).
On April 30, 2019, Occidental and Berkshire Hathaway Inc. (“Berkshire Hathaway”) entered into a securities purchase agreement, pursuant to which Berkshire Hathaway agreed to purchase newly issued Occidental preferred stock (the “series A preferred stock”) and a warrant to purchase Occidental common stock for an aggregate purchase price of $10 billion in cash (the “Berkshire Hathaway investment”). Berkshire Hathaway’s purchase of such series A preferred stock and warrant is subject to certain conditions, including completion of the merger.
For more information regarding the financing of the merger, see “The Merger—Financing of the Merger and Treatment of Existing Debt” beginning on page .
Sale of Anadarko Assets to TOTAL S.A.
In connection with the merger, Occidental and TOTAL S.A. (“Total”) entered into a binding memorandum of understanding, dated May 3, 2019, pursuant to which Occidental has agreed to sell to Total all of the assets, liabilities, businesses and operations of Anadarko in Algeria, Ghana, Mozambique and South Africa for $8.8 billion in cash, on a cash-free, debt-free basis (the “Total transaction”). The Total transaction is conditioned on the completion of the merger, the execution and delivery of a definitive purchase agreement, and the receipt of required regulatory approvals, as well as other customary closing conditions.
For more information regarding the Total transaction, see “The Merger—Sale of Anadarko Assets to TOTAL S.A.” beginning on page .
In the merger agreement, Anadarko has agreed that it and its subsidiaries will not, and that it will direct and use its reasonable best efforts to cause its and its subsidiaries’ respective officers, directors, employees, investment bankers, consultants, attorneys, accountants, agents and other representatives not to, directly or indirectly:
| • | take any action to solicit, initiate or knowingly encourage or facilitate the making of any acquisition proposal (as defined on page 109) or any inquiry with respect to an acquisition proposal; |
| • | engage in discussions or negotiations with any person with respect to an acquisition proposal (except to notify them of the existence of the applicable provisions of the merger agreement); |
| • | disclose any nonpublic information or afford access to properties, books or records to any person that has made, or to Anadarko’s knowledge is considering making, an acquisition proposal; |
| • | approve or recommend, propose to approve or recommend, or execute or enter into any agreement relating to an acquisition proposal; or |
| • | propose publicly or agree to do any of the foregoing. |
The merger agreement includes customary exceptions such that, prior to obtaining the Anadarko stockholder approval of the merger proposal (the “Anadarko stockholder approval”), Anadarko may furnish information and access, and may engage in discussions and negotiations regarding an acquisition proposal, if (i) the Anadarko Board concludes in good faith, after (x) receipt of the advice of a financial advisor of nationally recognized reputation and outside legal counsel, that such acquisition proposal constitutes or could reasonably be expected to result in a superior proposal (as defined on page ) and (y) taking into account any revised terms proposed by
Occidental after Occidental is notified of such acquisition proposal pursuant to the terms of the merger agreement, that failure to do so would be reasonably likely to be inconsistent with its fiduciary duties to Anadarko’s stockholders under applicable law and (ii) Anadarko receives from the person making such an acquisition proposal an executed confidentiality agreement and complies with certain specified procedures. For a discussion of the limitations on solicitation of acquisition proposals, see “The Merger Agreement—Covenants and Agreements—No Solicitation” beginning on page .
Termination of the Merger Agreement
Termination
The merger agreement may be terminated and the merger may be abandoned at any time prior to the effective time of the merger in any of the following ways:
| • | By the mutual written consent of Occidental and Anadarko. |
| • | By either Occidental or Anadarko: |
| • | if the merger has not been completed by February 9, 2020 (or, if the reason for not closing by February 9, 2020 is that the regulatory conditions specified in the merger agreement have not been satisfied by that date or because of an injunction prohibiting completion of the merger, and all other closing conditions of the parties have been satisfied, duly waived or are then capable of being satisfied, May 9, 2020) (such date, as it may be extended, the “end date”), provided that neither Occidental nor Anadarko can terminate the merger agreement due to the occurrence of the end date if its failure to fulfill any obligation under the merger agreement has principally caused or resulted in the failure to complete the merger on or before such end date; |
| • | if the Anadarko stockholder approval has not been obtained by reason of the failure to obtain the required vote at a duly held meeting of stockholders or at any adjournment thereof; |
| • | if there is any law or regulation that makes completion of the merger illegal or otherwise prohibited or if any judgment, injunction, order or decree enjoining Occidental or Anadarko from consummating the merger is entered and such judgment, injunction, order or decree becomes final and nonappealable; provided that this right to terminate the merger agreement will not be available to any party whose failure to fulfill any obligation under the covenant to use best efforts has principally caused or resulted in the imposition of such restraint or the failure of such restraint to be resisted, resolved or lifted; or |
| • | if there has been a breach by the other party of any of its representations, warranties, covenants or agreements contained in the merger agreement, which breach results in the failure to satisfy certain conditions to the obligations of Occidental and Merger Subsidiary (in the case of a breach by Anadarko) or certain conditions to the obligations of Anadarko (in the case of a breach by Occidental) to the merger, and such breach is incapable of being cured or, if capable of being cured, has not been cured within 30 days after written notice thereof to the party alleged to be in breach. |
| • | By Occidental: |
| • | prior to receipt of the Anadarko stockholder approval, if there has been a change in the Anadarko recommendation (as defined on page 110), whether or not permitted by the terms of the merger agreement (or the Anadarko Board or any committee thereof resolves to effect a change in the Anadarko recommendation). |
| • | By Anadarko: |
| • | in order to enter into a definitive agreement with respect to a superior proposal, only if Anadarko has complied with the specific procedures and requirements set out in the merger agreement with regard to the superior proposal and has paid the applicable termination fee. |
If the merger agreement is terminated as described above, the merger agreement will be void and have no effect, and there will be no liability or obligation on the part of any party, except that:
| • | certain provisions contained in the merger agreement with respect to the effect of termination, the allocation of costs and expenses and the termination fee will survive the termination of the merger agreement; |
| • | the agreements contained in the confidentiality agreement between Occidental and Anadarko will survive the termination of the merger agreement; and |
| • | no termination will relieve any party of any liability or damages resulting from any material and intentional breach by that party of the merger agreement. |
In addition, none of the financing sources (as defined on page ) will have any liability to Anadarko or any of its affiliates, and neither Anadarko nor any of its affiliates will have any rights or claims against any financing sources, relating to or arising out of the merger agreement, the debt commitment letters, the financing for the transactions contemplated by the merger agreement or otherwise.
Termination Fees
The merger agreement further provides that Anadarko will pay or cause to be paid to Occidental a termination fee of $1 billion in connection with a termination of the merger agreement under the following circumstances:
| • | if Occidental terminates the merger agreement pursuant to a change in the Anadarko recommendation, then Anadarko will pay or cause to be paid $1 billion not later than the date of termination of the merger agreement; |
| • | if (i) the merger agreement is terminated by Anadarko or Occidental pursuant to not having obtained the Anadarko stockholder approval by reason of the failure to obtain the required vote at a duly held meeting of stockholders or any adjournment thereof and (ii) on or before the date of such termination an acquisition proposal has been made and become publicly known, whether or not withdrawn, prior to the special meeting, then Anadarko will pay or cause to be paid $1 billion not later than the date an acquisition proposal (defined for this purpose with all references to “20%” in the definition of acquisition proposal (found on page 109) being replaced with references to “50%”) is consummated or a definitive agreement is entered into by Anadarko providing for any such acquisition proposal, so long as such acquisition proposal is consummated or such definitive agreement is executed within 12 months after the date of termination; |
| • | if (i) the merger agreement is terminated by Anadarko or Occidental due to the failure to consummate the merger by the end date and the Anadarko stockholder approval has not been obtained and (ii) on or before the date of such termination an acquisition proposal has been made and become publicly known, whether or not withdrawn, prior to the date of such termination, then Anadarko will pay or cause to be paid $1 billion not later than the date an acquisition proposal (defined for this purpose with all references to “20%” in the definition of acquisition proposal being replaced with references to “50%”) is consummated or a definitive agreement is entered into by Anadarko providing for any such acquisition proposal, so long as such acquisition proposal is consummated or such definitive agreement is executed within 12 months after the date of termination; |
| • | if (i) the merger agreement is terminated by Occidental pursuant to a breach by Anadarko of any of its representations, warranties, covenants or agreements, which breach resulted in the failure to satisfy one or more of certain additional conditions to the obligations of Occidental and Merger Subsidiary to the merger, and the Anadarko stockholder approval has not been obtained and (ii) on or before the date of such termination an acquisition proposal has been made and become publicly known, whether or not withdrawn, prior to the date of such termination, then Anadarko will pay or cause to be paid $1 billion not later than the date an acquisition proposal (defined for this purpose with all references to “20%” in the definition of acquisition proposal being replaced with references to “50%”) is consummated or a definitive agreement is entered into by Anadarko providing for any such acquisition proposal, so long as such acquisition proposal is consummated or such definitive agreement is executed within 12 months after the date of termination; or |
| • | if the merger agreement is terminated by Anadarko pursuant to its entry into a definitive agreement with respect to a superior proposal, then Anadarko will pay or cause to be paid $1 billion not later than the date of termination of the merger agreement. |
The merger agreement further provides that Occidental will pay or cause to be paid to Anadarko a termination fee of $1 billion if the merger agreement is terminated by Anadarko pursuant to a breach by Occidental of any of its representations, warranties, covenants or agreements, which breach resulted in the failure to satisfy certain conditions to the obligations of Anadarko to the merger. In such circumstances, Occidental will pay or cause to be paid $1 billion within two business days after the date of termination of the merger agreement.
For a more detailed discussion of each party’s termination rights and the related termination fee obligations, see “The Merger Agreement—Termination of the Merger Agreement” beginning on page .
Date, Time, Place and Purpose
The special meeting will be held on August 8, 2019, at 8:00 a.m., local time, at The Westin at The Woodlands, 2 Waterway Square Place, The Woodlands, Texas, 77380. At the special meeting, Anadarko stockholders will be asked to consider and vote on the merger proposal and the merger-related compensation proposal. Completion of the merger is conditioned on the approval of the merger proposal.
Record Date; Stockholders Entitled to Vote
Only holders of record of Anadarko common stock at the close of business on July 11, 2019, the record date, will be entitled to notice of, and to vote at, the special meeting or any adjournment or postponement thereof.
At the close of business on July 8, 2019, the most recent practicable date for which such information was available, there were 502,401,622 shares of Anadarko common stock outstanding and entitled to vote at the special meeting. The number of shares of Anadarko common stock outstanding and entitled to vote at the special meeting as of the record date is not expected to be meaningfully different from the number as of July 8, 2019. Each share of Anadarko common stock outstanding on the record date entitles the holder thereof to one vote on each proposal to be considered at the special meeting. Anadarko stockholders may vote in person or by proxy through the internet or by telephone or by a properly executed and delivered proxy card with respect to the special meeting.
A complete list of stockholders entitled to vote at the special meeting will be available for viewing by any Anadarko stockholder during ordinary business hours for a period of ten days before the meeting, for purposes pertaining to the special meeting, at Anadarko’s offices at 1201 Lake Robbins Drive, The Woodlands, Texas 77380, and at the time and place of the special meeting during the full duration of the meeting.
Quorum; Abstentions and Broker Non-Votes
A quorum of Anadarko stockholders is necessary for Anadarko to hold the special meeting. The holders of a majority of the outstanding shares of Anadarko common stock entitled to vote at the special meeting must be present in person or represented by proxy in order to constitute a quorum.
If you submit a properly executed proxy card, even if you do not vote for the proposal or vote to “abstain” in respect of the proposal, your shares of Anadarko common stock will be counted for purposes of calculating whether a quorum is present for the transaction of business at the special meeting. Anadarko common stock held in “street name” with respect to which the beneficial owner fails to give voting instructions to the broker, bank or other nominee, and Anadarko common stock with respect to which the beneficial owner otherwise fails to vote, will not be considered present at the special meeting for the purpose of determining the presence of a quorum.
A broker non-vote occurs when a broker, bank or other nominee holding shares for a beneficial owner has not received voting instructions from the beneficial owner and the broker, bank or other nominee does not have discretionary authority to vote the shares. If you hold your shares of Anadarko common stock in street name and do not provide voting instructions to your broker, bank or other nominee, your shares will be considered to be broker non-votes and will not be considered to be present at the special meeting for the purpose of determining the presence of a quorum.
Required Vote to Approve the Merger Proposal
Approval of the merger proposal requires the affirmative vote of holders of a majority of the outstanding shares of Anadarko common stock entitled to vote thereon. Failures to vote, broker non-votes and abstentions will have the same effect as a vote cast “AGAINST” the merger proposal.
Required Vote to Approve the Merger-Related Compensation Proposal
Approval of the merger-related compensation proposal requires the affirmative vote of holders of a majority of the outstanding shares of Anadarko common stock present in person or represented by proxy at the special meeting and entitled to vote thereon. Failures to vote and broker non-votes will have no effect on the vote for this proposal (assuming a quorum is present); abstentions will have the same effect as a vote cast “AGAINST” the approval of this proposal.
Voting by Anadarko’s Directors and Executive Officers
At the close of business on July 8, 2019, the most recent practicable date for which such information was available, directors and executive officers of Anadarko and their respective affiliates owned and were entitled to vote 1,163,013 shares of Anadarko common stock, representing less than 1% of the shares of Anadarko common stock outstanding on that date. The number and percentage of shares of Anadarko common stock owned by directors and executive officers of Anadarko and their respective affiliates as of the record date are not expected to be meaningfully different from the number and percentage as of July 8, 2019. Anadarko currently expects its directors and executive officers to vote their shares of Anadarko common stock in favor of each of the proposals to be voted on at the special meeting, but no director or executive officer has entered into any agreement obligating him or her to do so.
You should consider all the information contained in, and incorporated by reference into, this proxy statement/prospectus in deciding how to vote for the proposals presented in the proxy statement/prospectus. In particular, you should consider the factors described under “Risk Factors” beginning on page .
