Carl Icahn leaves Occidental Petroleum after nearly three years

Carl Icahn has taken out a big bet on Occidental Petroleum Corp.

OXY 17.59%

selling the last of what was once a roughly 10% stake in the oil and gas producer as its shares rose.

Mr. Icahn, who was cutting the post, has sold the rest in recent days, according to a letter he sent to Occidental’s board on Sunday. The move ends one of Mr Icahn’s most dramatic recent clashes, which began when he criticized Occidental for outbidding its biggest rival Chevron Corp.

to strike a $38 billion deal to buy Anadarko Petroleum Corp. in May 2019.

The activist investor’s two representatives on Occidental’s board are also resigning, he said in the letter, as required by a settlement agreement with the company at the start of the pandemic.

Occidental shares fell in March 2020, allowing Mr. Icahn to double his investment, increasing his stake from 2.5% to around 10%. By then, he had been arguing for nearly a year that the Anadarko deal was an ill-conceived defensive move and campaigning for the ousting of chief executive Vicki Hollub. He also took issue with Warren Buffett’s expensive $10 billion funding that Occidental relied on to pay for the deal.

A Occidental Petroleum facility in Hobbs, NM


Ernest Scheyder/Reuters

Mr. Buffett has been buying Occidental shares in recent days. Since Friday, Mr. Buffett’s Berkshire Hathaway Inc.

reported owning about $5 billion.

Weeks after Mr. Icahn increased his stake, he and Occidental reached a truce that returned former CEO Stephen Chazen as chairman and added three directors, including Mr. Icahn’s two representatives. Ms Hollub remained CEO and the company announced deep cost cuts.

Mr. Icahn thanked Mr. Chazen in Sunday’s letter, including for supporting his efforts to issue a free warrant dividend that he said created more than $4 billion in value for Occidental shareholders. .

“While we’ve certainly had our disagreements with Vicki Hollub over M&A, we thank her for using her well-honed operating skills and resilience so well in Occidental’s darkest hours,” wrote Mr. Icahn. “We believe our relationship with Occidental has proven to be the best in activism.”

With the help of a surge in oil prices, Occidental shares have risen more than fivefold after falling below $10 in 2020. They closed Friday at $56.15, just below what they were before the finalization of the agreement with Anadarko.

Mr. Icahn made a profit of about $1 billion on the investment, according to people familiar with the matter. He also has an unrealized net profit of about $500 million on warrants, they said. He said in the letter that he still owns more than 15 million warrants.

Mr. Icahn has recently focused on a small energy company, utility Southwest Gas Holdings Inc.,

which announced last week its intention to separate a subsidiary which it had called for sale. He’s also hosting a proxy fight at McDonald’s Corp.

on the treatment of pregnant pigs by its suppliers. The latter is an atypical campaign for Mr. Icahn, who turned 86 last month, as he has a small stake and does not expect to turn a profit.

Write to Cara Lombardo at [email protected]

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