Oxy swallows ‘poison pill’ as Carl Icahn tries to oust its board of directors

By Joe Carroll and Kevin Crowley on 3/13/2020

HOUSTON (Bloomberg) --Occidental Petroleum implemented a so-called poison pill plan to defend against unsolicited takeover approaches just a day after activist investor Carl Icahn escalated his campaign to fire the beleaguered U.S. oil producer’s board.

Such measures are usually deployed in hostile takeover situations. Occidental is implementing the plan later this month and will allow shareholders to vote on it at its annual general meeting, it said Friday in a statement. If the shareholders vote down the pill at the meeting, it will expire. But if they vote in favor of it, it will extend for one year.

The company’s stock has dropped about 60% this month amid collapsing oil prices, allowing Icahn to quadruple his investment in Occidental, which he has savaged for buying Anadarko Petroleum Corp. last year for $37 billion. On Thursday, Icahn said “strong bids” would eventually emerge for Occidental and a new board should consider them.

A representative for Icahn, who holds a 10% stake in Occidental, wasn’t immediately available for comment.

Under terms of the plan, stockholders will be issued one “right” for each share they own as of March 23. The rights would be exercisable should anyone amass a 15% stake in the Houston-based company.

If exercised, the rights will give the owner “that number of shares of common stock having a market value of two times the exercise price of $55.00 per right.”

The idea is to effectively dilute a potential acquirer if they buy up shares at low price levels.

The shares traded up as much as 13% Friday and were 4.5% higher at $12.43 a share at 9:44 a.m. in New York.

Icahn yesterday called the Anadarko deal “one of the worst disasters in financial history” and said it has destroyed $47 billion in shareholder money. He has singled out Chief Executive Officer Vicki Hollub as putting her own job before investors’ best interests.

The announcement Friday appears to make any resolution between Icahn and Hollub less likely.

Occidental’s market value is now less than one-third of the price it paid for Houston-based Anadarko.

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