Written By In August 2019, the merger between oil and gas giants Occidental Petroleum (Oxy) and Anadarko Petroleum was hailed as a remarkable victory for Oxy CEO Dawn Hollub. The ambitious $55 billion deal was widely considered to be one of the most complex and daring mergers in recent history. But as the details of the merger began to emerge, many analysts were left scratching their heads: how had Oxy managed to pull off a deal widely regarded as “the dumbest deal in history”? In this blog post, we will explore the remarkable story of how Dawn Hollub pulled off her “dumbest deal in history” and why it has been so successful.
How the Oxy and Anadarko Merger Came to Be
In 2016, Oxy and Anadarko were two of the world’s largest oil and gas companies. They had been rivals for years, but that all changed when they decided to merge.
The merger was the brainchild of Dawn Hollub, the CEO of Anadarko. Hollub saw an opportunity to create a “supermajor” oil and gas company that would be unrivaled in size and scope.
To make the merger happen, Hollub had to convince Oxy’s CEO Steve Chazen to sign on. It wasn’t easy – Chazen was famously reluctant to do deals – but Hollub eventually got him on board.
The deal was announced in August of 2018 and it sent shockwaves through the oil and gas industry. The combined company would be worth an estimated $50 billion and would control some of the most valuable oil and gas assets in the world.
The deal was widely criticized at the time – many people thought it was too risky and that Anadarko was paying too much for Oxy. But Hollub persisted, and in 2019, the merger was completed.
It’s still too early to say whether or not the merger will be a success, but so far it looks like Hollub has pulled off one of the biggest deals in history.
The Pros and Cons of the Merger
The benefits of the merger include creating a more diversified business, which is less reliant on any one commodity; reducing costs and increasing efficiencies; and increasing shareholder value. The negatives of the merger include the potential for job losses and cost cutting measures; the possibility that the two companies may not be able to successfully integrate; and the fact that there will be less competition in the industry.
Why Some People Believe the Merger was a Bad Idea
The Anadarko and Oxy merger has been widely criticized by industry analysts, with some believing that it was a bad idea from the start. Here are some of the key reasons why:
-The deal was heavily reliant on debt, which left the combined company highly leveraged and vulnerable to a downturn in the oil market.
-The merge created a behemoth that was difficult to manage and integrate, leading to cost overruns and inefficiencies.
-Anadarko’s legacy liabilities (including its environmental cleanup costs) became Oxy’s problem after the merger, further weighing down the company.
Ultimately, only time will tell whether the Anadarko-Oxy merger was a success or a failure. However, there are many who believe that it was ill-conceived from the outset and has already put the combined company at risk.
How the Merger has Affected Oxy and Anadarko So Far
The merger of Occidental Petroleum and Anadarko Petroleum was finalized on August 8, 2019. The combined company is now the largest oil and gas producer in the Permian Basin and one of the largest in the United States. The deal has had a major impact on both companies so far.
Occidental Petroleum has seen its stock price rise since the merger was announced. The company’s share price rose from $57.62 on May 7, 2019, to $59.88 on August 8, 2019, the day the deal was finalized. This represents a increase of 3.9%.
Anadarko Petroleum’s stock price has also seen a bump since the merger announcement. Anadarko’s share price rose from $56.40 on May 7, 2019, to $58.88 on August 8, 2019, an increase of 4.2%.
The two companies have also seen their debt levels rise since the merger was announced. As of June 30, 2019, Occidental had $40 billion in debt and Anadarko had $26 billion in debt. Together, they now have a total of $66 billion in debt.
What the Future Holds for Oxy and Anadarko
It’s hard to say what the future holds for Oxy and Anadarko. The two companies have been through a lot in the past year, and it’s unclear how they will fare in the years to come.
What is clear is that Dawn Hollub, the CEO of Occidental Petroleum, seems to have pulled off one of the biggest deals in history. The $38 billion acquisition of Anadarko Petroleum was widely seen as a risky move, but so far it seems to be paying off.
The combined company is now the largest oil producer in the Permian Basin, and Occidental is well positioned to take advantage of the growing demand for oil. only time will tell if Hollub’s gamble will pay off in the long run, but for now, it looks like she has made Occidental into a powerhouse.
