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NEW YORK (Reuters) – Occidental Petroleum chief executive Vicki Hollub was caught off guard when U.S. oil giant Chevron swooped in last month with a $33 billion offer to buy Anadarko Petroleum, the oil and gas exploration and production firm she had been wooing for nearly two years.

FILE PHOTO: Vicki Hollub, President and CEO of Occidental Petroleum, speaks at the 2019 Milken Institute Global Conference in Beverly Hills, California, U.S., April 29, 2019. REUTERS/Lucy Nicholson/File Photo

Chevron, nearly five times larger than Occidental, appeared to have out-maneuvered its smaller rival. But on Sunday Hollub showed the fight was not over. After a whirlwind few days to raise more cash, Hollub offered a sweetened deal. By Thursday, Chevron had bowed out.

In edging out Chevron, Hollub leaned on global relationships and knowledge forged from 35 years in the oil industry, according to about a dozen people familiar with the talks leading up to the company’s latest offer.

Occidental had struggled to win over Anadarko because its first public $38 billion offer of 50 percent cash and 50 percent stock, as well as previous offers made privately, required the approval of Occidental shareholders, and Anadarko was not convinced they would go for the deal, two sources familiar with the discussions told Reuters.

Hollub knew she needed to substantially increase the cash offer – thereby making shareholder approval unnecessary – and moved swiftly to secure it, the sources said.

She was in Paris on April 26, just two weeks after Chevron’s announcement, and struck an $8.8 billion deal with French major Total SA to sell Anadarko assets her company didn’t yet own.

Two days later she was in Omaha, Nebraska, securing $10 billion in financing from billionaire investor Warren Buffett’s Berkshire Hathaway Inc, who typically does not partner with companies pursuing unsolicited takeovers.

Occidental declined to make Hollub available for an interview for this story. The company’s shares are down 9 percent since making their offer public in late April.

The combined company would establish Occidental as the largest operator in the Permian basin in west Texas and New Mexico, the heart of the U.S. shale revolution, where a boom in production has propelled the United States into becoming the world’s largest oil producer.

It would make Occidental the third-largest U.S. oil company with a market value of about $80 billion, dwarfed only by global giants Exxon Mobil and Chevron.

“She’s doing the boldest M&A thing that’s happened since the ‘80s,” said Amy Myers Jaffe, energy consultant and senior fellow at the Council on Foreign Relations. “You’re having an atypical M&A battle in a very competitive space where (usually) the bigger you are, the more you’re going to win.”

Hollub’s challenge has stunned an industry where the last attempt to break up an agreed-upon deal between two U.S. oil companies was in 1984 when Texaco challenged Pennzoil’s acquisition of Getty Oil.

It has also angered some Occidental investors who say Hollub is overstretching the company’s balance sheet in an ill-advised quest for size in a volatile industry.

“Our concern is the willingness of the management team at Occidental to cut very favorable deals against the interests of shareholders on a longer-term basis,” said John Linehan, portfolio manager at T. Rowe Price.

T. Rowe, the sixth-largest holder of Occidental shares, announced it would vote against the board of directors on the annual shareholder meeting Friday. But such a move may be mostly symbolic.

An Occidental spokesman declined to comment on the concerns but pointed to Hollub’s defense of her strategy that it was better to raise cash than issue new debt.

Hollub’s background in the technical aspects of oil production contrasts with her predecessor, a banker and known dealmaker. She has been described as down to earth by former and current employees, differing from flamboyant energy CEOs.

LONGTIME DISCUSSIONS

Buying Anadarko was seen as the best way for Occidental to gain more acreage in the Permian shale basin, where it markets nearly a quarter of all barrels produced in the region.

When Chevron announced a deal on April 12 to buy Anadarko, Hollub gathered the merger team. They were shocked that Anadarko had accepted a bid that was $11 per share below what Occidental had privately offered, three of the people familiar with the discussions said.

“She thought, we’re in it to win it. Let’s make our offer public so their shareholders know what they passed up,” one of the sources said.

In a letter to Anadarko’s board of directors on April 24, Occidental said they “were surprised and disappointed” that Anadarko had not agreed to their previous two offers in April.

Anadarko executives, however, remained concerned that Occidental shareholders could scuttle the deal, leaving them without a buyer, two sources familiar with the situation said. The board of directors wanted to stick with Chevron.

Just two days after sending the letter, Hollub was in Paris meeting with Total CEO Patrick Pouyanne to discuss Anadarko’s African assets, according to two sources familiar with the discussions.

The two already had a relationship stemming from the Dolphin Gas Project, a Middle East cross-border gas initiative where both companies have an equal share. Total had made it known to her that they coveted Anadarko’s properties, including a liquefied natural gas project in Mozambique.

“Vicki wanted to show that she could quickly put the cash on the table. In less than 10 days she had the cash ready,” a Paris-based source said.

Omaha, Nebraska was next. Buffett is known for moving quickly when a deal piques his interest, but he tends to avoid getting involved in hostile takeover bids.

The meeting was set up by BofA CEO Brian Moynihan, whose bank was helping to provide financing for the Anadarko deal. Hollub later said Buffett was “warm and wonderful” in their meeting, a source familiar with the discussions said.

Buffett, cash flush and on the hunt for new deals, agreed to provide $10 billion in financing in return for an 8 percent premium, a concern for dividend-focused shareholders who believe the terms are too pricey.

Slideshow (2 Images)

The two deals enabled Hollub to submit a revised offer on Sunday, increasing the cash component from 50 percent to 78 percent.

On Thursday, Chevron said it would collect its $1 billion termination fee and walk away from the negotiations.

(For a graphic on ‘Oxy-Anadarko would be third largest U.S. oil company’ click tmsnrt.rs/2VSZ3hY)

Reporting By Devika Krishna Kumar and Jessica Resnick Ault; additional reporting by David Gaffen, Bate Felix, David J. French, Jennifer Hiller, Jennifer Ablan; Writing by David Gaffen; Editing by Ross Colvin

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