Shares of Anadarko Petroleum (NYSE:APC) rose an incredible 60% in April, according to data provided by S&P Global Market Intelligence. It wasn't a smooth and steady climb, however. There were two discrete advances in the month, each of which was swift, dramatic, and driven by news.
On April 12, integrated energy giant Chevron (NYSE:CVX) announced plans to buy Anadarko for $33 billion. That equated to roughly $65 per share. The price of Anadarko shot up from the mid-$40-per-share range to the low $60s, eventually getting to around $64 per share a few days later. With the proposed acquisition, Chevron was attempting to expand its U.S. onshore drilling business.
Later in the month, though, Anadarko got a second offer, this time from Occidental Petroleum (NYSE:OXY). Occidental was basically looking to achieve the same ends as Chevron. After examining the counter offer, and despite a roughly $1 billion breakup fee included in the Chevron agreement, Anadarko agreed to further discussions with Occidental on a deal valued at roughly $76 per share. That news sent Anadarko's stock up again, as investors assumed that it would either consummate the new deal or, potentially, get an improved offer from Chevron.
In early May, Anadarko agreed to a deal with Occidental valued at $76 per share. Anadarko shareholders will receive $59 in cash and 0.2934 shares of Occidental stock for each share of Anadarko they own.
At this point, the fight for Anadarko appears to be over. Although it is possible that Chevron will make another offer, the difference in the price isn't likely to provide the huge gains that were seen in April. With the stock trading close to the final price offered by Occidental, conservative investors are probably better off selling Anadarko and locking in the gains. That said, if the idea of owning Occidental shares is enticing, then sitting tight would be a reasonable option, too. However, because part of the deal is tied to the value of Occidental shares, there is a very real risk that the end value of the deal could move lower if you decide to ride it out.