Occidental Petroleum has clinched the deal to acquire Anadarko Petroleum as Chevron decided not to better its initial offer to counter Occidental’s $57bn bid.

In a statement, Chevron stated that it will allow the four-day match period to expire and expects that Anadarko will terminate the earlier signed merger deal. As per the terms of the merger agreement, Chevron will be eligible to receive a $1bn termination fee.

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Chevron chairman and 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.”

In April 2019, Chevron signed an agreement to acquire Anadarko shares for $33bn or $65 per share. However, two weeks later Occidental made an unsolicited proposal to purchase Anadarko for $76 per share. Later, Anadarko’s board recognised Occidental proposal as a superior offer.

“This transaction further establishes Occidental as a premier operator in prolific global oil and gas regions.”

The Occidental bid was also supported by a $10bn investment from American conglomerate Berkshire Hathaway.

With Chevron leaving the contest, Occidental has now signed a definitive agreement to acquire Anadarko with a final offer of $59 in cash and 0.2934 shares of Occidental common stock. The overall transaction, including the assumption of Anadarko’s debt, is valued at $57bn.

Occidental president and CEO Vicki Hollub said: “This exciting transaction will create a global energy leader with a world-class portfolio, proven operational capabilities and industry-leading free cash flow metrics.

“This transaction further establishes Occidental as a premier operator in prolific global oil and gas regions with the ability to deliver production growth of 5% through investment in projects with industry-leading returns.”

Subject to Anadarko shareholders’ approval and regulatory consent, the deal is expected to close in the second half of 2019.

Earlier in May, Occidental also signed an agreement to sell Anadarko assets in Algeria, Ghana, Mozambique and South Africa to Total for $8.8bn. The deal is contingent upon Occidental closing the acquisition of Anadarko.