Anadarko Petroleum Corporation (NYSE: APC) is having an overwhelmingly strong start to the trading session this morning after the company announced takeover news. With a takeover at a strong premium, investors are excitedly pushing the stock up. Today, we’ll talk about:
- The takeover news;
- what we’re seeing from APC stock as a result; and
- what we’ll be watching for ahead.
APC Announces Takeover News
As mentioned above, Anadarko Petroleum is having a great day in the market today after news broke that the company would be taken over. The news came by way of press release early in the premarket hours.
In the release, APC announced that it will be taken over by Chevron. Chevron has agreed to pay $33 billion in a cash-at-stock deal. The value for Chevron is simple. The company is working to make its deep water exploration in the gulf and southwest region of Texas stronger. This acquisition will allow it to do just that. The total value of the acquisition, including debt comes to $50 billion.
In a statement, Michael Wirth, Chairman and CEO at Chevron, had the following to offer:
This transaction builds strength on strength for Chevron. The combination of Anadarko’s premier, high-quality assets with our advantaged portfolio strengthens our leading position in the Permian, builds on our deepwater Gulf of Mexico capabilities and will grow our LNG business. It creates attractive growth opportunities in areas that play to Chevron’s operational strengths and underscores our commitment to short-cycle, higher-return investments.
This transaction will unlock significant value for shareholders, generating anticipated annual run-rate synergies of approximately $2 billion, and will be accretive to free cash flow and earnings one year after close.
The above statement was followed up by Al Walker, Chairman and CEO at APC. Here’s what he had to say:
The strategic combination of Chevron and Anadarko will form a stronger and better company with world-class assets, people and opportunities. I have tremendous respect for Mike and his leadership team and believe Chevron’s strategy, scale and operational capabilities will further accelerate the value of Anadarko’s assets.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that the news leads to moves. When it comes to Anadarko Petroleum, the news proved to be overwhelmingly positive.
After all, this acquisition is taking place at a strong premium, offering a return of value for investors. So, it’s not surprising to see that excited investors are pushing the stock for the top.
As is just about always the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (8:20), APC is trading at $61.79 per share after a gain of $14.99 per share or 32.03% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on APC. In particular, we’re interested in following the story surrounding the company’s acquisition. While the agreement is a definitive one, the transaction is subject to customary closing conditions as well as regulatory approval. Nonetheless, we’ll continue to keep an eye on the story and bring the news to you as it breaks!
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