Chevron Corp (NYSE: CVX) gave up from its plan to acquire Anadarko Petroleum Corp on Thursday, as the Occidental Petroleum Corp’s bid of $38 billion was three times higher.
Chevron didn’t want to raise its initial bid after Occidental Petroleum raised the cash amount of its $76 per share bid and Anadarko’s board considered it as a better offer. Chevron, the second largest oil producing company in the U.S., got a $1 billion breakup fee, adding it will apply to a $5 billion share repurchase program.
Shares of Chevron rallied 3.1% on Thursday closing at $121.19 while shares of Occidental tumbled 6.4% to $56.33, its lowest point for the past 10 years.
“Make no mistake. We have the financial capacity to outbid Occidental, but we concluded that an increased offer would have eroded value to our shareholders, and it would have diminished returns on capital,” CEO of Chevron Mike Wirth said. “The bar is high. We don’t have a need to do anything. We are not desperate to do a deal.”