Hess shareholders sign off on $53 billion sale to Chevron
Adds analysts comments on paragraphs 3, 4, 13, 16
By Sabrina Valle
HOUSTON, May 28 (Reuters) -Hess HES.N shareholders on Tuesday approved the proposed $53 billion merger with Chevron CVX.N that paves the way for the No. 2 U.S. oil company to gain a prize asset and a foothold in rival Exxon Mobil's XOM.N massive Guyana discoveries.
The approval clears one hurdle, but the deal still requires regulatory approval and must face a lengthy arbitration battle with Exxon and CNOOC 0883.HK, Hess' partners in Guyana.
Regulatory approval could come next month, said Frederic Boucher, risk arbitrage analyst at Susquehanna Financial Group, based on the time the Federal Trade Commission (FTC) took to approve Exxon's acquisition of Pioneer Natural Resourcesearlier this month.
But the most crucial step to approve the deal, he said, is a resolution of the dispute filed by Exxon and CNOOC asserting they have a right of first refusal to any sale of Hess's Guyana assets.
A majority of Hess's 308 million shares outstanding votingin favor of the deal was required for approval. Results were preliminary and Hess did not immediately provide the vote tally.
The vote is a win for CEO John Hess, who put his reputation and the future of a company founded by his father on the line.
The result puts to rest claims by some shareholders who wanted additional compensation for the delay in closing the sale. Exxon's arbitration could push the deal's closing into 2025.
“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 Hess said.
Hess and Chevron shares gained on the results. Hess rose a fraction to $152.05 and Chevron climbed less than 1% to $159.04.
"Assuming Chevron wins the arbitration from Exxon or finds a settlement, the transaction is now going to happen," said Mark Kelly, an analyst with financial firm MKP Advisors.
The yes vote has huge implications for both companies. Acquiring the profitable oilfields in Guyana from Hess would provide Chevron with a means to mitigate the geopolitical risks tied to the TengizChevroil project in Kazakhstan, which mainly transports its oil through Russia to a port on the Black Sea.
In addition, this acquisition could counterbalance the cost overruns experienced at Chevron's Australian liquefied natural gas (LNG) projects, which have been affected by labor and operational issues.
Acquiring Hess's Guyana holdings would fill out Chevron's oil and gas reserves and provide a new avenue for production growth, beyond their existing operations in the U.S. and Central Asia, said Allen Good, an analyst with Morningstar investment firm.
Hess shareholders will own nearly 15% of the much larger Chevron and get access to its dividend, which is four times greater than Hess'.
The shareholder sign-off also strengthens the companies' hand in any negotiations with Exxon. While Exxon has expressed no interest in bidding for Hess as a whole, it has not ruled out a potential bid for Hess' assets in Guyana.
"It's good Chevron cleared this hurdle given the rumblings over the uncertainty of the Guyana arbitration," Good said. "However, I don’t think it will influence the outcome of Exxon’s claim".
Chevron anticipates moving the FTC regulatory process towards its conclusion in the coming weeks, a spokesperson said.
"We are confident our position on the preemption right will be affirmed in arbitration," the company said.
Exxon operates all production in Guyana with a 45% stake in the giant Stabroek Block. CNOOC owns another 25% of the joint-venture. Both claim a right of first refusal on any Hess sale of its 30% stake.
Proxy firm Institutional Shareholder Services had recommended shareholders vote to abstain and urged Hess to offer an incentive to shareholders because of the deal delay.
John Hess spent the last month lobbying large shareholders to win support for the merger. He had personally visited or called more than 30 firms, according to people familiar with the matter.
Reporting by Sabrina Valle in Houston
Editing by Marguerita Choy, Gary McWilliams and Matthew Lewis
Mga Kaugnay na Asset
Pinakabagong Balita
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.
