Finance History | Five Greenway Plaza, Houston, 8 August 2019 — US$10 Billion Financed Occidental's Anadarko Acquisition

On 8 August 2019, Occidental Petroleum completed its acquisition of Anadarko Petroleum and simultaneously closed a US$10 billion cash investment from Berkshire Hathaway in 2019 dollars. Occidental issued Berkshire 100,000 shares of cumulative perpetual preferred stock with a liquidation value of US$100,000 per share in 2019 dollars, together with a warrant to buy 80 million Occidental common shares. The preferred accrued dividends at 8 percent annually, implying US$800 million of yearly preferred dividends in 2019 dollars on the original US$10 billion face amount. If dividends were unpaid or paid in stock, the applicable rate increased to 9 percent. The preferred had no ordinary maturity, so it could remain outstanding unless redemption provisions were triggered or Occidental chose to redeem under the agreement. The warrant initially carried an exercise price of US$62.50 per common share in 2019 dollars and remained exercisable until one year after no preferred shares were outstanding, subject to adjustments and approvals. These terms separated Berkshire's return into current income and equity optionality. The preferred ranked ahead of common stock for dividends and liquidation value, while the warrant could become valuable if Occidental's common shares appreciated. The structure did not insulate Berkshire from the acquisition's economics. Occidental needed cash flows sufficient to service the preferred dividend alongside debt, operating costs and investment across a commodity business exposed to oil and gas prices. For Occidental, Berkshire's committed capital improved its ability to offer cash for Anadarko without first issuing the same amount of common equity. That speed and certainty came at a substantial contractual cost and potential future dilution if the warrant was exercised. The financing closed only because the Anadarko acquisition closed, directly tying Berkshire's securities to the larger transaction rather than to a general capital raise. Five Greenway Plaza anchors the investment to Occidental's Houston offices. The signed lobby represents a US$10 billion commitment in 2019 dollars that helped complete a contested energy acquisition by combining perpetual preferred capital, an 8 percent dividend and a long-lived claim on possible equity upside. Photo: WhisperToMe, CC BY-SA 3.0, via Wikimedia Commons.