Alas, Occidental Petroleum didn’t go with a Texas lawyer for its $38 billion counter-bid for Anadarko Petroleum Corp., whose board already agreed to a $33 billion purchase by Chevron.
Oxy’s general counsel counsel Marcia Backus – a Vinson & Elkins alum – didn’t respond to a request for comment. But in picking Faiza Saeed at Cravath, Swaine & Moore in New York, the company chose a skilled M&A lawyer who also happens to be well versed in “interloper” situations.
The Harvard-trained lawyer – who was named the firm’s presiding partner in 2016 – advised Williams Cos. on its $4.9 billion interloper bid for Southern Union. That effort wasn’t successful, with Southern Union going with Energy Transfer’s sweetened $5.1 billion offer.
However, Saeed advised Time Warner on its defense against an unsolicited proposal from 21st Century Fox, which was withdrawn, and its defense against Carl Icahn and its merger with AOL. She also counseled Disney on its $85 billion acquisition of 21st Century Fox, overcoming an interloper bid by Comcast to its original $66 billion agreement.
She also represented Terra Industries on its defense against a hostile bid from CF Industries (that was later withdrawn) as well as the company’s $4.6 billion proposed sale to Yara and CF Industries’ $5.2 billion topping bid.
Oxy also has a long relationship with Cravath on the litigation side, which could come in handy later if the parties “all start suing each other,” one legal source said. The firm’s website lists partner Kevin Orsini as having counseled Oxy on litigation matters.
One person close to the situation said Oxy hired Saeed a while ago when the company thought it was doing a friendly deal with Anadarko.
“This was supposed to be a bilateral negotiated transaction,” the person said. “Nobody thought this would end up in a competitive situation.”
The source doesn’t expect any movement on the situation for at least a week, as Oxy CEO Vicki Hollub is meeting with investors from both companies to promote the deal.
Other Oxy in-house attorneys working on the deal besides Backus include associate general counsel and corporate secretary Nicole Clark, assistant general counsel of M&A/strategic transactions Brad Pollack and senior counsel on compensation and benefits Elizabeth Gooch.
Cravath’s Saeed is known primarily as a media and entertainment deal lawyer, having advised Yahoo!, DreamWorks, Viacom and Amblin Partners on transactions. But she also has done M&A work in other industries, including advising Precision Castparts on its $37 billion acquisition by Berkshire Hathaway, and in energy, assisting Buckeye Partners on the sale of its holdings in VTTI to Vitol and IFM earlier this year for almost $1 billion.
Oxy’s bankers on the deal include Bank of America Merrill Lynch’s Patrick Ramsey and Purna Saggurti in New York and Brad Hutchinson in Houston, as well as Citi’s Steve Trauber and Muhammad Laghari in Houston and Mark Shafir and Serge Tismen in New York.
V&E is advising Anadarko on the sale to Chevron along with Wachtell, Lipton, Rosen & Katz with a team led by chairman Mark Kelly and partner Lande Spottswood. Its bankers include Dan Ward at Evercore in New York and Suhail Sikhtian at Goldman Sachs in Houston.
Paul, Weiss, Rifkind, Wharton & Garrison is representing Chevron, which is using Shearman & Sterling on the deal’s antitrust elements. Credit Suisse Securities (USA) is Chevron’s financial advisor, including Ricardo Concha in Houston.
While analysts said the $65 per share offer for Anadarko was a bargain for Chevron (Oxy had previously offered $70), some believed the deal’s $1 billion break-up fee could be a deterrent to other bidders.
Now that Oxy has reentered with a $76 per share bid (75% cash versus Chevron’s 50%), they’re not convinced the company is going to be successful – or that it’s even a good idea.
Raymond James analyst Pavel Molchanov called Oxy’s proposed acquisition of Anadarko “ill-advised” for three reasons: no “fundamental necessity” to do any M&A on that scale; limited overlap of the two companies’ assets (although cost synergies could still materialize over time); and the difficulty fighting a bidding war against a supermajor that’s four times larger.
“Occidental may ‘win’ the bidding war or ‘lose’ to Chevron, the latter being the more likely outcome, in our view,” he said.
Molchanov assigns 10% odds of yet another company coming in with a higher bid. “That would be a far-fetched scenario, although I suppose anything is possible,” he told The Texas Lawbook.
Analysts at Tudor, Pickering, Holt said a potential deal would significantly elevate Oxy’s risk profile, primarily the balance sheet. They added that the DJ Basin and Gulf of Mexico properties are outside the company’s core development areas; and asset sales may be difficult given the size of Anadarko’s stake in Western Gas and its Mozambique project.
“Ultimately the deal could make financial sense, but at this price we believe it introduces financial and execution risk that investors may not be comfortable with,” they said.
TPH said if the deal isn’t consummated, there could be other, smaller potential transactions, such as a tie-up with Noble Energy that offers some of the same benefits (the target’s Permian assets) at a more “palatable price tag/risk level.”