Chevron Corp.’s (NYSE: CVX) stock was up 2.5% in morning trade on Thursday after the company decided not to raise its bid for Anadarko Petroleum (NYSE: APC). Chevron expects Anadarko to terminate the merger agreement, which means the latter will have to pay Chevron a break-up fee of $1 billion.
Earlier this week, Anadarko said it received a superior bid of $38 billion from Occidental Petroleum (NYSE: OXY) and intends to pursue that unless Chevron puts forth a better offer. Chevron’s earlier price was $33 billion.
Chevron’s CEO Michael Wirth said, “Winning in any environment doesn’t mean winning at any cost. Cost and capital discipline always matter, and we will not dilute our returns or erode value for our shareholders for the sake of doing a deal.”
Chevron also stated that it plans to increase its share repurchase rate by 25% to $5 billion per year. Earlier this month, Chevron completed the acquisition of Pasadena Refining System and PRSI Trading from Petrobras America Inc. for $350 million.
Anadarko’s shares were down 3.1% in morning hours while Occidental’s shares dropped 6.2%. Chevron’s shares have gained over 10% so far this year and its move to let go of the Anadarko deal is being viewed as the right one.