Safe to say, Carl Icahn is not a fan of Occidental Petroleum Corp.’s $38 billion deal to buy Anadarko Petroleum Corp.
In a scathing open letter to Occidental shareholders Monday, the billionaire activist investor said Chief Executive Vicki Hollub got ripped off by Warren Buffett.
“Buffett figuratively took her to the cleaners. . . . The Buffett deal was like taking candy from a baby and amazingly she even thanked him publicly for it!”
In May, Occidental OXY, +0.34% announced the deal for Anadarko APC, +0.35% , outbidding Chevron Corp. CVX, +0.22% . The deal included $10 billion in financing from Buffett’s Berkshire Hathaway Inc. BRK.B, -0.55%
Buffett will receive 100,000 shares of preferred stock with a liquidation value of $100,000 per share, together with a warrant to purchase up to 80 million shares of Occidental common stock worth about $1.2 billion as part of the deal.
Icahn has argued that the acquisition hugely overvalues Anadarko, was hastily put together and is extremely risky for shareholders. Icahn owns a stake in Occidental worth about $1.7 billion. He’s launched a proxy fight against the oil company and is seeking to replace four directors.
Icahn said in Monday’s letter that Hollub has “limited M&A experience” and wrote: “I believe Hollub learned that negotiating a deal with Buffett, one of the country’s canniest operators, is not the optimal way to get M&A experience.”
Read: Berkshire Hathaway stands to win in Occidental deal. It’s classic Warren Buffett
“But you can’t blame Warren, if Hollub was arrogant enough to negotiate a deal with Buffett of this magnitude despite her admittedly limited experience in M&A and the Board was misguided enough to rubber stamp it, then one might say in Warren’s defense that it was almost his fiduciary duty to Berkshire Hathaway to accept it,” Icahn added.
Occidental sent shareholders a rebuttal letter Monday, urging them to reject Icahn’s board nominees. “Mr. Icahn’s own statements demonstrate that he does not understand or support the strategic and financial merits of the acquisition,” the letter said, “and we believe that his Board nominees would interfere with our ability to successfully . . . deliver on the full promise of this acquisition.”
Occidental shares have sunk 17% over the past three months, and are down about 14% year to date, compared to the S&P 500’s SPX, +0.28% 19% gain this year.
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