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Chevron Deal Approved By HESS Shareholders Amid Dispute With Exxon Over Guyana

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(CTN News) – On Tuesday, Hess Corporation shareholders, an oil corporation headquartered in New York, authorized Chevron’s proposed acquisition of the company for $53 billion.

Nevertheless, the precise date of the deal’s completion remains uncertain as a result of the ongoing dispute between the companies and Exxon Mobil.

The merger agreement was approved by the majority of outstanding shares; however, the corporation did not immediately disclose the vote total. The announcement had a minimal impact on Hess’ stock.

Chief Executive Officer John Hess stated.

“We are very pleased that the majority of our stockholders recognize the compelling value of this strategic transaction and look forward to our merger with Chevron being completed successfully.”

Nevertheless, the imminent agreement may be jeopardized by Exxon’s assertion of a right of first refusal over Hess’s assets in Guyana, which is based on a joint operating agreement that governs the Stabroek Block, a substantial offshore oil resource.

Exxon is the primary developer of the Stabroek Block, with a 45% stake, and holds a 30% share. 25% of the company is owned by China National Offshore Oil Corp.

Exxon filed for arbitration in March to safeguard its rights under the joint operating agreement. Chevron and Hess informed investors that the transaction would expire if Exxon prevailed.

On Tuesday, Corp. declared that the arbitrators’ decision would determine the merger’s closure. Hess declared that the organizations are endeavoring to complete the merger “as expeditiously as possible.”

Prior to the vote, Hess shares were trading at approximately $152,

Suggesting that the deal spread has increased since the agreement was disclosed. This suggests that certain investors believe the agreement is in jeopardy.

Chevron has maintained that its acquisition of Hess is not connected to Exxon’s interests under the joint operating agreement.

On Tuesday, Bill Turenne, a spokesperson for Chevron, issued a statement in which he stated, “We are confident that our stance on the preemption right will be upheld in arbitration and are actively engaged in the process of advancing this straightforward matter.” “We are eager to finalize the deal and have Hess join our organization.”

Nevertheless, Exxon CEO Darren Woods, who told CNBC in April that the oil major created the deal, stated that his business is well-positioned to prevail in arbitration.

The Chevron-Hess merger, which was previously anticipated to be completed in the first half of 2024, has been postponed due to the Exxon factor. The arbitration court has been requested by Hess to render a decision in the fourth quarter, which should allow the firms to “close the transaction shortly thereafter,” as Chevron CEO Mike Wirth informed investors during a conference call last month.

Exxon does not intend to submit an offer for Hess.

Exxon is seeking to establish the agreed-upon value for Hess’s assets in Guyana and to validate its rights under the JOA, according to Woods.

Hess would maintain its proprietorship of the Stabroek Block and continue to operate independently in the event that Exxon prevails and the Hess-Chevron agreement is unsuccessful.

The Chevron agreement is also under investigation by the Federal Trade Commission. Chevron anticipates that the FTC review will progress toward a resolution in the coming weeks, as per Turenne.

Institutional Shareholder Services recommended that shareholders delay their vote on the merger agreement to allow for the availability of information regarding the arbitration procedure’s duration.

Chevron and Hess delayed informing shareholders of the risk associated with the joint operating agreement, not disclosing it to them until months after the merger was made public, according to ISS. In the event that the acquisition fails, Hess shareholders would be at risk, as Chevron is not obligated to pay a termination fee, according to ISS.

Furthermore, shareholders would not be eligible to receive Chevron’s dividend during the arbitration procedure, as per ISS. According to ISS, identified the dividend as one of the primary benefits of the merger.

In contrast, Glass Lewis recommended that shareholders authorize the acquisition through a vote. The company acknowledged that the disagreement with Exxon has caused uncertainty, but it stated that “the strategic and financial merits of the proposed merger are sound and reasonable, on balance.”

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Alishba Waris is an independent journalist working for CTN News. She brings a wealth of experience and a keen eye for detail to her reporting. With a knack for uncovering the truth, Waris isn't afraid to ask tough questions and hold those in power accountable. Her writing is clear, concise, and cuts through the noise, delivering the facts readers need to stay informed. Waris's dedication to ethical journalism shines through in her hard-hitting yet fair coverage of important issues.

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