Create a free Manufacturing.net account to continue

Anadarko Buying Kerr-McGee, Western Resouces

Oil and gas company shells out more than $20 billion for two smaller rivals.

OKLAHOMA CITY (AP) - Oil and natural gas producer Anadarko Petroleum Corp. announced two multibillion dollar deals to acquire smaller producers Kerr-McGee Corp. and Western Gas Resources Inc.

Houston-based Anadarko will pay $16 billion in cash, or $70.50 per share, for Oklahoma City-based Kerr-McGee. That represents a 40 percent premium over Thursday's closing price of $50.30 on the New York Stock Exchange.

Anadarko also will pay $61, or $4.74 billion, to buy Western Gas Resources, an independent natural gas explorer, and will assume $560 million in debt. That cash offer represents a 49 percent premium over the company's closing stock price of $40.91 on Thursday.

''We are creating a combined company with industry-leading positions in the deepwater Gulf of Mexico and the Rockies, two of the fastest-growing oil and natural gas producing regions in North America,'' Anadarko Chairman, President and CEO Jim Hackett said. ''The core assets being acquired strongly complement Anadarko's existing properties, providing the scale and focus needed to deliver more robust, predictable and efficient growth.''

The news sent shares of Western Gas sharply higher to $59 in electronic premarket trading, up $18.09, or 44 percent, from Thursday's close. Shares of Anadarko dropped $4.47, or 9.2 percent, to $43.92 in premarket activity.

Kerr-McGee shares jumped $19.55, or 39 percent, to $69.85 in premarket trading.

Under the Kerr-McGee deal, Anadarko will assume debt and other liabilities totaling $1.6 billion.

Hackett said Anadarko will review the consolidated assets to select divestiture candidates, with the dual goals of paring acquisition-related debt and refocusing the portfolio.

''All three companies have certain assets that we will likely deem to be non-core once combined,'' he said.