New York CNN Business  — 

Billionaire Carl Icahn launched a legal attack on Occidental Petroleum on Thursday, arguing the oil company paid way too much money to acquire Anadarko Petroleum.

Icahn, whose firms own about $1.6 billion of Occidental (OXY) stock, said that the “misguided” takeover of Anadarko (APC) “raises very real questions about the competence” of the company’s management and board.

Not only was the purchase price “sky high,” Icahn’s firms said in a lawsuit, but the financing costs were “astronomical as well.”

The lawsuit demands Icahn get access to “inspect” certain Occidental books and records linked to the Anadarko deal.

In a statement, Occidental said it is “committed to maximizing long-term value for all shareholders” and its board and management team “continually evaluate opportunities” to do so. Occidental said it looks forward to closing the Anadarko deal, which it expects to deliver “compelling value and returns” to investors in both companies.

The company added that it will respond “in due course” to Icahn’s demand for access to records.

Anadarko, an oil driller with prized land in the booming Permian Basin, found itself in the middle of a bidding war between Occidental and Chevron (CVX). Anadarko abandoned its takeover agreement with Chevron (CVX) after Occidental swooped in with a more generous offer.

At the time of the agreement, the Occidental offer valued Anadarko at $57 billion, including debt. If completed, it will be the fourth-biggest oil and gas deal in history, according to Drillinginfo Market Research.

Chevron, a company worth nearly six times as much as Occidental, walked away from the deal because it feared overpaying.

Warren Buffett deal questioned

Icahn took particular issue with Occidental’s agreement with Warren Buffett to help finance the takeover. Buffett’s Berkshire Hathaway (BRKA) agreed earlier this month to invest $10 billion in Occidental’s preferred stock.

Analysts and other shareholders expressed concern at the time about the generous terms Buffett received in the deal. Occidental agreed to pay an 8% dividend on Berkshire’s preferred stock, compared with the common stock’s 5% dividend. And Occidental shareholders could have their position watered down because Berkshire received warrants to purchase up to 80 million shares of common stock.

Icahn called the financing from Berkshire “extraordinarily and unnecessarily expensive” financing.

Occidental has defended the deal, saying it will increase the company’s position in fast-growth regions like the Permian of West Texas.

“This exciting transaction will create a global energy leader with a world-class portfolio,” Occidental CEO Vicki Hollub said in a statement earlier this month.

To ease concerns about debt, Occidental has pledged to rapidly clean up its balance sheet. The company even preemptively reached a deal to raise cash by selling certain assets.

Occidental should be selling itself?

Still, Icahn argued that the Anadarko takeover is extremely risky due to the turbulent nature of oil prices.

The math on the deal “might work” if oil prices increase and stay there for several years, the lawsuit said. But if oil prices tumble to $45 a barrel or lower, there is a “substantial risk” that Occidental will have to cut its coveted dividend, Icahn said.

Rather than plunking down tens of billions of dollars on Anadarko, Icahn argued that Occidental should instead have put itself up for sale.

“They decided to go for growth-at-all-costs at the price of ballooning the company’s debt burden,” Icahn said.