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Oxy sends investor letter to reject activist Icahn proxy bid

Oxy CEO, Vicki Hollub Photographer: Kyle Grillot/Bloomberg
Oxy CEO, Vicki Hollub Photographer: Kyle Grillot/Bloomberg

Occidental Petroleum sent a letter to its shareholders Monday asking them to reject the board takeover bid pushed by activist investor Carl Icahn.

The famed corporate raider built a nearly 5% ownership stake in Houston-based Oxy after he was upset with the company’s successful bidding war to acquire The Woodlands-based Anadarko Petroleum for $38 billion.

While Icahn may not be able to prevent the Anadarko deal from closing, if his bid is successful he could potentially oust the Oxy leadership and sell much of its assets piece by piece.

Oxy is arguing it is building an acreage position – especially in the booming Permian Basin – for the best long-term growth and profit, while Icahn has contended Oxy overpaid and played too fast and loose with its shareholders’ dollars.

Icahn last week put forward four proposed board nominees to replace four of Oxy’s existing 10 board members.

Oxy’s new letter contends that Icahn’s nominees would interfere with the integration of Amadarko’s assets and planned divestitures.

“Mr. Icahn’s own statements demonstrate that he does not understand or support the strategic and financial merits of the acquisition,” wrote Oxy CEO Vicki Hollub and Chairman Eugene Batchelder, “and we believe that his board nominees would interfere with our ability to successfully integrate Anadarko’s valuable assets, execute our divestiture and deleveraging plan and deliver on the full promise of this acquisition at this critical juncture.”

They added, “We ask stockholders to carefully consider the destabilizing impact that the Icahn Group solicitation could have on the long-term value of your shares.”

In a multi-step process, Icahn first needs the support of holders of 20 percent of Oxy’s stock to set a record date to determine which shareholders can petition to hold a special meeting.

Hollub and Batchelder noted that three of Icahn’s four nominees are either Icahn employees or business allies – “none of whom possess skills, experience or expertise that are additive or superior to our existing directors.”

Icahn’s nominees are Shell Oil President John Hofmeister, Icahn Capital portfolio manager Nicholas Graziano, Icahn Enterprises general counsel Andrew Langham, and Alan LeFevre, who was previously named to a board seat at Herbalife after Icahn won a proxy bid there.

The four board members that Icahn is seeking to remove are Batchelder, who is a retired ConocoPhillips executive; Spencer Abraham, head of The Abraham Group consulting firm; Margaret Foran, a Prudential Financial senior executive; and Avedick Poladian, a former real estate executive at Lowe Enterprises.

This article first appeared on the Houston Chronicle – an Energy Voice content partner. For more from the Houston Chronicle click here.

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