Corporate M&A

Carl Icahn Raises Stake in Occidental to 9.9%

By Isha Makkar
March 13, 2020
a minute read

Activist investor Carl Icahn has raised his stake in embattled oil & gas producer Occidental Petroleum Corp. to nearly 10%, even as he continues his scathing criticism of the company’s CEO Vicki Hollub and its board of directors for the company’s expensive and ill-timed acquisition of Anadarko Petroleum Corp. last year.

In a regulatory filing on Thursday, Icahn disclosed that he now holds a 9.9% stake in the company, up from 2.5% at the end of last year. Icahn also stated that the industry will consolidate and that he “expects strong bids to emerge” for Occidental. The company’s market capitalization has dropped from nearly US$50 billion before the launch of its bid for Anadarko to about US$11 billion at present.

In August 2019, Occidental completed its bid to acquire Anadarko in a cash and stock transaction valued at US$55 billion, including the assumption of debt. The subsequent crash in oil prices has left the company vulnerable to the heavy financing burden taken on fund the acquisition, which included an expensive US$10 billion preferred stock issuance to billionaire investor Warren Buffett’s Berkshire Hathaway Inc.

Occidental also announced this week that it was shrinking it capital spending budget for 2020 by around one-third to between US$3.5 and $3.7 billion, and also cut its quarterly dividend for the first time in three decades.

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