When Financial institution of America and Citigroup turned up along with Occidental Petroleum for its hostile bid for Anadarko Petroleum, Wall Road dealmakers weren’t stunned. Occidental has solid shut relationships with each banks, specifically with Financial institution of America, which equipped Occidental’s former chief government and an government charged with enterprise improvement.
The job for bankers on the two Wall Road behemoths, together with a few of the most well-connected advisers in Houston, will likely be to cleave Anadarko from the palms of rival Chevron in a deal that was organized two weeks in the past. The worth tag Occidental has agreed; $55bn, together with debt it will assume as a part of the takeover.
The eventual worth paid might be greater. Chevron is loath to interact in a bidding struggle, individuals with data of the corporate’s pondering stated. However it might nonetheless flip up on the bargaining desk so it doesn’t lose extremely prized US shale oil belongings in addition to a pure fuel mission in Mozambique and platforms within the Gulf of Mexico that Anadarko owns.
The combat might be brutal and would rank as one of many largest hostile takeovers struck over the previous decade if Occidental comes out on prime.
The roles Financial institution of America and Citi have gained are not any accident. One of many driving forces behind the transaction is Oscar Brown, a former Financial institution of America oil and fuel banker, who joined Occidental in 2016 with a mission to assist the corporate’s chief government Vicki Hollub perform a transformational deal.
The worth of acquisitions suggested on by former Financial institution of America government Oscar Brown
Mr Brown has labored on greater than $200bn of transactions as a dealmaker and is “quirky, brilliant and really aggressive”, an individual near him stated. The bid for Anadarko could be probably the most audacious of his profession, the particular person added.
The connection with Financial institution of America dates again far earlier than Mr Brown’s hiring although: former Occidental chief government Stephen Chazen labored on oil offers when he was a managing director with Merrill Lynch, which was acquired by Financial institution of America through the monetary disaster.
Ms Hollub and Mr Brown have been steered by Patrick Ramsey and Purna Saggurti, the co-head of world mergers and acquisitions and chairman of world company and funding banking at Financial institution of America, respectively. The 2 males have been joined by Brad Hutchinson, who co-head’s the financial institution’s Americas vitality funding banking division and whose crew final 12 months suggested on the $10.5bn sale of BHP’s shale belongings to BP.
The trio of Financial institution of America bankers are additionally flanked by a pair of Citigroup executives: Stephen Trauber and Mark Shafir. Mr Trauber, who’s well-known in Houston and sponsors a regional travelling basketball crew, counts Valero amongst his shoppers. Al Walker, Anadarko’s chief government, labored with Mr Trauber when the 2 had been at UBS. Mr Trauber would go on to seal Anadarko’s largest takeover: its $18bn buy of Kerr-McGee in 2006.
Whereas Mr Shafir has not specialised solely in vitality offers — he’s the worldwide co-head of M&A at Citi — his work on a variety of high-profile transactions will show useful to Occidental. Mr Shafir led Citi’s work advising chipmaker Broadcom on its tried takeover of rival Qualcomm, a deal that was in the end blocked by US president Donald Trump, in addition to the reverse merger that noticed Dell go public late final 12 months.
Wednesday, 24 April, 2019
The Occidental board additionally counts a former Citi government amongst its ranks. Carlos Gutierrez, who joined the Occidental board as a director in 2009, was beforehand vice-chairman of Citi’s institutional shoppers group.
If Occidental is profitable in its bid, Financial institution of America and Citi will likely be in line for a profitable payday. Dealogic estimates charges on the deal might attain $170m, which will likely be cut up with the advisers to Anadarko. One other $100m-plus might be earned to finance the transaction, ought to Occidental faucet company bond markets to fund the money portion of its supply. Bridge financing would add tens of millions extra in charges.
The deal would additionally symbolize a major win for the 2 banks, as US rivals reminiscent of Goldman Sachs, Morgan Stanley and JPMorgan have labored to solidify their maintain on the advisory enterprise. Citi and Financial institution of America have ranked both fourth or fifth in world M&A advisory assignments in every of the previous 4 years, in accordance with Dealogic. Whereas nonetheless early within the 12 months, the work for Occidental might assist Citi claw again market share and edge itself into the highest three for the primary half of 2019.
On the competing aspect Chevron is being suggested by a few of Wall Road’s finest recognized dealmakers. That features Credit score Suisse’s Greg Weinberger, an adviser to a few of the world’s largest vitality teams, and Scott Barshay, a associate at Paul Weiss, who has suggested Basic Electrical, IBM and Harris Company on offers value a complete of almost $100bn in latest months.
Each Chevron and Occidental have discovered veteran Evercore vitality bankers Dan Ward and Will Hiltz, along with Goldman Sachs’ head of pure sources Suhail Sikhtian, sitting on the reverse finish of the negotiating desk with Anadarko.
The Anadarko board should now determine if the bid from Occidental is superior to the deal it has agreed with Chevron, after which whether or not or to not have interaction with Occidental. Anadarko’s advisers have been learning their subsequent transfer after Occidental submitted two presents and by no means heard again from its goal.