Billionaire investor rips major oil deal, says Warren Buffet took Occidental “to the cleaners”

Occidental Petroleum

One of Wall Street’s most legendary billionaire investors is continuing to rip into the energy sectors largest oil and gas merger. Carl Icahn has been a vocal critic surrounding Occidental Petroleum’s (NYSE: OXY) $55 billion takeover of Anadarko Petroleum earlier this year.

The well-known investors was so against the deal, saying that it was botched from the beginning, that he filed a lawsuit against Occidental. Specifically, he has gone after the company’s chief executive, who made a deal with Warren Buffet who Icahn says took “to the cleaners” with the less experienced CEO.

“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…Buffet figuratively took her to the cleaners…The Buffet deal was like taking candy from a baby and amazingly she even thanked him publicly for it,” said Icahn in a letter on Monday, criticizing the CEO’s limited M&A experience. “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 argues that the acquisition massively overvalues Anadarko, a deal which he thought was hastily put together and also very risky for shareholders due to how much they will pay for the rival oil company. Icahn owns around $1.7 billion worth of Occidental and has launched a proxy fight against the company in a bid to replace four directors.

In response, the company issued a letter to shareholders that urged them to reject Icahn’s board nominees. While it’s uncertain whether or not anything will happen in response to this drama, it does seem clear that Icahn won’t be giving up the matter without a fight.

On the other side of the deal, Warren Buffet has been criticized throughout 2019 for his difficulty in finding good investment opportunities for Berkshire Hathaway. However, this Anadarko deal is undoubtedly one of his biggest wins so far in the year.

Shares of Occidental didn’t move much in response to this particular criticism from Icahn, ending the day up 0.35 percent on Monday. Over the past six months, the stock has been consistently tumbling down from a high around $70 per share to below $50 per share in June.

Even looking as far back as 5 years ago, the company has slowly but steadily been falling, this steady decline likely being a primary reason why Occidental’s chief executive was so willing to make a deal with Warren Buffet in the first place, accepting such a supposedly poor deal.

Occidental Petroleum Company Profile

Occidental Petroleum is an independent exploration and production company with operations in the United States, Latin America, and the Middle East. At the end of 2018, the company reported net proven reserves of 2.8 billion barrels of oil equivalent.

Net production averaged 658 thousand barrels of oil equivalent per day in 2018, at a ratio of 77% oil and natural gas liquids and 23% natural gas. – Warrior Trading News