A bidding war breaks out as Occidental Petroleum makes $38 billion offer for Anadarko, topping Chevron's (APC)

The $38 billion offer tops Chevron's $33 billion bid for Anadarko made earlier this month.
Watch Anadarko Petroleum trade live .

A bidding war in the petroleum space broke out on Wednesday after Occidental Petroleum made a $38 billion offer for Anadarko Petroleum , topping Chevron's $33 billion offer earlier this month.

Shares of Anadarko, the oil and natural gas exploration and production company, soared 12%.

"Occidental believes its proposal is superior both financially and strategically for Anadarko's shareholders, creating a global energy leader with the scale and geographic diversification to drive growth and deliver compelling value and returns to the shareholders of both companies," the said in a statement on Wednesday.

Occidental, based in Houston, Texas, is offering a $76 a share for Anadarko, in an offer consisting of cash and stock. That's $11 a share higher than the $65 a share offer Chevron proposed earlier this month.

Anadarko and Chevron announced a deal on April 12, sending Anadarko shares up by 30% to a six-month high that day.

Wednesday's offer was the third that Occidental has made for Anadarko since March, the company said in a letter delivered to Anadarko's board of directors.

"We were surprised and disappointed that your Board did not engage with us on that proposal, or our proposal of April 8, even though both were significantly higher than the price you accepted from Chevron," Occidental CEO Vicki Hollub wrote.

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