Hess’s shareholders approved a $53bn acquisition by Chevron. This is a controversial deal at the center of a high profile brawl among America’s top oil companies.
Investors voted on Tuesday to accept Chevron’s offer, despite concerns over an arbitration process initiated by ExxonMobil. The rival company claims it has the right of first refusal in any sale of Hess’s stake in the prize oil discovery off Guyana’s coast.
John Hess is the CEO of Hess. He said: “We are pleased that most of our stockholders understand the value of this transaction. We look forward to a successful merger with Chevron.”
Hess didn’t immediately announce the results of the shareholder vote at this meeting.
Wall Street was closely watching the vote after Institutional Shareholder Services a leading proxy advisor recommended shareholders abstain. They called for a pause on the transaction until further information is revealed about Exxon’s arbitration regarding the deal. Three hedge funds indicated that they would abstain from voting.
The vote on Tuesday cleared a major hurdle in the acquisition, the largest in Chevron history. However, the outcome of the deal is still subject to the Federal Trade Commission’s investigation and the arbitration between Exxon Chevron. Chevron said that it would walk away from the acquisition if the court ruled in favour of its rival.
The takeover, announced in October, was meant to be the culmination of an epic nine decade story which saw Hess grow from a small heating oil company into a global energy giant. The Hess oil company is the largest publicly listed family-owned business in the US. Its share value was valued at $5bn.
Exxon’s filing for arbitration in March threw the deal into chaos. The company claims that the terms of the joint operating agreement for the Stabroek Block, a huge oil project in Guyana with an estimated 11bn gallons of oil, give it the right to pre-empt the sale of Hess’s stake. Hess and Chevron disagree with Exxon’s interpretation of this contract.
Exxon owns 45 percent of the project, while Hess, China’s Cnooc, and Hess each hold 30 and 25 percent, respectively. Guyana’s President told the Financial Times that Chevron would be welcome in the project, and that Exxon’s control stake might cause concern.
Chevron expects that the arbitration process will be completed by the end the year. Exxon has said that the arbitration process could continue until 2025.
A Chevron spokesperson said that the company was happy to hear that Hess shareholders voted in favor of the merger.
“We expect the FTC’s regulatory process to be completed in the next few weeks. We are confident that our position regarding the pre-emption rights will be confirmed in arbitration, and we are working on advancing the process. “We look forward to closing the deal and welcoming Hess into our company,” said the spokesman.
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