Hess Shareholders Approve $53 Billion Merger With Chevron

hess shareholders approve $53 billion merger with chevron

Hess’s shareholders on Tuesday voted to approve a $53 billion deal to sell the company to Chevron, clearing a hurdle for the companies to combine.

The approval amounts to the first good news for the companies in months, as they have been engaged in a public brawl with Exxon Mobil that still threatens to sink the deal and possibly recast the futures of Chevron and Hess.

The vote was closely watched as several large shareholders had said they would abstain from voting due to the feud between Exxon, Chevron and Hess over Hess’s share of a generational oil treasure in Guyana. Exxon says it has a right to challenge Chevron’s offer for Hess’s shares in a drilling consortium it is part of alongside China’s Cnooc, and is pursuing arbitration.

Hess said a majority of the outstanding shares of Hess common stock were voted in favor of the adoption of the merger agreement.

“We are very pleased that the majority of our stockholders recognize the compelling value of this strategic transaction and look forward to the successful completion of our merger with Chevron,” CEO John Hess said. “Together we will be positioned as a premier integrated energy company, with the leadership, asset portfolio and financial resources to deliver significant shareholder value for years to come.”

hess shareholders approve $53 billion merger with chevron

Proxy-advisory firm Institutional Shareholder Services has recommended that shareholders abstain from voting on the deal, citing questions about the deal’s valuation of Hess and uncertainty over how long the arbitration will take. Some investors have said that Chevron’s deal for Hess undervalues the smaller company’s assets.

Several large stockholders including D.E. Shaw had said they would abstain because the agreement between Chevron and Hess failed to account for the delay introduced by the dispute with Exxon.

Exxon filed for arbitration in the International Chamber of Commerce in Paris in March. It has said it expects the proceedings to extend into 2025.

In recent weeks, John Hess sought to project confidence in calls with some large investors that the deal would take place, according to stockholders. He said his lawyers were competent and pointed out that historically, rights of first refusal at the asset level haven’t prohibited corporate transactions, they said.

John Hess and his counterpart Chevron CEO Mike Wirth have been on a roller-coaster ride since they announced the merger agreement in October.

Days after the announcement, Exxon’s chief executive Darren Woods told Wirth he was looking forward to collaboration in Guyana. But within a few weeks, Exxon contended that it and Cnooc have a contractual right to pre-emptively match Chevron’s offer for Hess’s 30% stake in Guyana. Private talks between the companies failed, and the two sides have now dug in.

By voting positively on Tuesday, shareholders have taken the risk to lock in the deal despite the uncertainty shrouding it.

If Exxon’s argument prevails in arbitration, Hess’s Guyana holdings—worth $40 billion or more, by some estimates—would turn into a sort of poison pill. It wouldn’t only blow up the merger with Chevron, per the terms of its agreement with Hess, but would likely scare off any future suitors—except for Exxon itself.

Potential buyers would also have to consider the fact that, under certain conditions, Hess could owe around $1.7 billion in breakup fee to Chevron if it strikes a new deal.

Write to Benoît Morenne at [email protected]

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