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John Hess Scrambles to Secure Shareholder Approval for $53 Billion Chevron Merger

 |  May 26, 2024

Hess CEO John Hess is under intense pressure to secure shareholder support for a proposed $53 billion sale to Chevron Corp, one of the largest potential mergers in the oil industry. The deadline for resolving shareholder concerns is Tuesday, but Hess faces a challenging landscape.

Hess, 70, has dedicated the past month to engaging with investors, aiming to solidify backing for the deal. Despite initial confidence last fall that the sale would proceed smoothly, recent weeks have seen a decline in support. According to interviews conducted by Reuters, more investment funds have expressed reservations, complicating Hess’s efforts.

The proposed merger has encountered obstacles, including a protracted U.S. federal regulatory review and an unexpected arbitration challenge from Exxon Mobil. These developments have left approximately 40% of outstanding shares in a state of uncertainty.

Related: Chevron-Hess Merger Faces Increased Uncertainty Amid Legal Challenges

Achieving more than 50% approval from the 308 million outstanding shares is now more challenging for Hess. While he can rely on his family shares and those held by other directors and management, amounting to about 10% of the total, this may not be sufficient to secure the majority needed for the deal to proceed.

Adding to the urgency, Hess Corp has suffered a $5 billion market value decline since the deal’s announcement. Shareholders are also concerned about missing out on dividend payments from Chevron, which are four times larger than those from Hess. Every quarter the merger is delayed, the financial incentive for shareholders diminishes.

Source: Reuters