March 13, 2020 / 2:57 PM / 5 months ago

Occidental tries to head off investor Icahn as he amasses shares

(Reuters) - Occidental Petroleum (OXY.N) said on Friday it will move to stop investors from amassing more than a 15% stake in a move aimed at activist investor Carl Icahn, who has been buying up shares and stepping up criticism of the oil producer’s $38 billion purchase of Anadarko Petroleum last year.

FILE PHOTO: Billionaire activist-investor Carl Icahn gives an interview on FOX Business Network's Neil Cavuto show in New York February 11, 2014. REUTERS/Brendan McDermid/File Photo

This week’s slump in oil prices has crystallized the problems facing Occidental, which took on debt to buy Anadarko in a bet that U.S. shale production would keep rising and crude prices would remain high. Earlier this week, Occidental slashed its dividend by 86% and said it would cut spending by 30%.

Occidental said on Friday it will issue a shareholder rights offering, often known as a “poison pill” because it is designed to discourage takeovers by diluting the ownership interest of a hostile party. Icahn now owns nearly 10% of the company’s stock, he said this week, and has been agitating for changes to Oxy’s board following the Anadarko deal.

Occidental’s dividend cut was its first in 19 years, and the company’s market value is now just over $10 billion, compared with a value of roughly $80 billion when the deal was announced in April of last year. That has given Icahn more ammunition to aim at the board.

“It’s time for Oxy CEO and board to be held accountable,” Icahn said in an interview with CNBC on Friday.

Icahn bought about 88.6 million shares for $2.21 billion, raising his stake in Occidental to nearly 10% from 2.53% at the end of last year, an SEC filing on Thursday showed. He has repeatedly called upon Occidental to disclose if it had received any takeover offers while looking to buy Anadarko.

The rights offering would issue one right for each share outstanding at the close of March 23, exercisable if a person or group acquires at least 15% of the company’s shares, or if passive institutional investors buy 20% of the oil producer.

The rights plan has to be approved at the 2020 annual meeting, the company said.

Occidental’s market value plunged to $10.6 billion as of Thursday’s close, less than a third of what it paid for Anadarko and its debt has ballooned to about $40 billion.

U.S. crude fell to roughly $32 a barrel on Friday, down about 20% on the week as the coronavirus outbreak threatened demand and crude producers promised more supply. [O/R]

Reporting by Arathy S Nair and Shradha Singh in Bengaluru; Editing by Sriraj Kalluvila and Marguerita Choy

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