Texas-based Occidental Petroleum Corp. is in the crosshairs of billionaire investor Carl Icahn, according to several reports. Icahn plans to nominate a slate of ten directors to seize control of the board of the U.S. oil and gas producer.
This isn’t Icahn’s first foray into board takeovers. The billionaire investor, who owns a stake in the company valued at about $1 billion, plans to make his move before the November 29 deadline for nominations.
A vocal critic of both the company and Occidental’s Chief Executive Officer Vicki Hollub, Icahn has taken the company to task over its August 2019 takeover of Texas-based Anadarko Petroleum Corp. completed at a cost of $37 billion. He attacked the lack of a shareholder vote and the $10 billion financing the company obtained from financier Warren Buffett to complete the Anadarko takeover.
Occidental’s stock has slumped 41% since its interest in Anadarko was first reported in April, wiping out about $15 billion of shareholder value. The company is the seventh-worst performer in the S&P 500 index this year, according to a Bloomberg report.
In a recent letter explaining his decision to launch a proxy fight, Icahn said the merger made “no sense” to anyone other than CEO Hollub and certain members of the board, who he said “grossly overpaid” for Anadarko to avoid becoming a takeover target themselves.
Icahn has argued Occidental should launch a strategic review, including a potential sale of the combined company, once the Anadarko deal was completed.
“I believe it has become apparent — perhaps to everyone except Hollub and her board — that OXY’s massive Anadarko gamble is seriously jeopardizing the company’s future value,” said Icahn in a recent letter.
Houston-based Occidental said this month it plans to cut spending by 40% next year and accelerate asset sales in order to pay down debt and protect its dividend, both of which Hollub described as her “top priorities.” The company said it’s on track to exceed the upper end of its $10 billion to $15 billion asset plan by the middle of 2020, six months ahead of schedule.
Icahn isn’t alone in his criticism of the Anadarko deal and its impact on Occidental. Can Icahn gather enough support from fellow investors to take control of the board? His prior effort to add four directors failed earlier this year. Meanwhile, the billionaire investor may find allies in the shareholder base as institutional investors are increasingly seeking a more active role in the direction of the company in terms of corporate governance and financial performance.