Buffett Puts $10B Behind Occidental Petroleum In Bid For Anadarko

Warren Buffett's Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) confirmed it invested $10 billion in Occidental Petroleum Corporation OXY on condition the oil and gas giant completes its proposed acquisition of Anadarko Petroleum Corporation APC.

What Happened

A jet registered to Occidental Petroleum reportedly landed in Omaha, Nebraska with the likely thesis being the company traveled to visit Buffett in his hometown, Bloomberg reported Monday night citing data from FlightAirMap.

On Tuesday, Berkshire and Occidental Petroleum confirmed details of what may have been discussed Monday. As part of an investment, Berkshire will receive 100,000 shares of a cumulative perpetual preferred stock valued at $100,000 a share.

Berkshire will also receive a warrant to buy up to 80 million shares of Occidental's stock at an exercise price of $62.50.

Why It's Important

Occidental President and CEO Vicki Hollub said in the press release the company is "thrilled" to receive Berkshire's financial support.

"We have long believed that Occidental is uniquely positioned to generate compelling value from Anadarko's highly complementary asset portfolio," the CEO said.

Berkshire's support could help lift Occidental's profile in its bidding war to buy Anadarko. Occidental is up against Chevron Corporation CVX, whose market capitalization is roughly five times bigger and boasts a larger balance sheet, CNBC said.

Occidental will engage with Anadarko's board of directors to "deliver this superior transaction to our respective shareholders."

Occidental's stock traded lower by 2.6 percent to $58.55 per share Tuesday morning, while Chevron shares traded higher by 2.8 percent.

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