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Shareholders To Vote On Chevron-Hess Deal

The agreement that will see oil major Chevron (CVX) buy Hess Corp. (HES) for $53 billion U.S. faces a shareholder vote on May 28.

Hess stockholders are scheduled to vote on whether to accept Chevron’s offer that would see Hess shareholders receive 1.025 Chevron shares for each Hess share that they own.

Analysts are saying the voting could go either way, with futures traders giving the merger a 45% chance of being completed.

In addition to the shareholder vote, Chevron is also waiting for a ruling on the merger from the U.S. Federal Trade Commission (FTC), which could approve or veto the deal.

Chevron’s management team says they remain confident that the deal will ultimately be approved by both Hess shareholders and regulators.

The acquisition would give Chevron new ground in the oil-rich Permian Basin of Texas where Hess has extensive operations.

Hess CEO John Hess owns 9.3% of the company’s stock and has been urging other shareholders to support the deal. It was approved unanimously last October by the boards of directors at both companies.

However, several hedge funds that have sizable stakes in Hess have announced their intention to vote against the proposed deal or abstain from voting at all.

Some hedge fund managers have said publicly that the deal premium is weak and the offer from Chevron undervalues Hess Corp.

When the deal was announced last fall, it offered Hess shareholders a 10% premium to the average closing price of that stock over the previous 20 days. That premium has since shrunk to about 4%.

Another wrench in the deal involves rival oil giant ExxonMobil (XOM), which is partners with Hess in an offshore project in Guyana.

That project is one of the most promising oil developments in the world, expected to hold more than 10 billion barrels of crude.

Exxon has challenged Chevron’s acquisition of Hess in court, arguing that it has a right of first refusal to buy Hess’ stake in the Guyana project.

The stock of Chevron is up 6% this year and trading at $157.75 U.S. per share. Hess Corp.’s stock has increased 5% so far in 2024 and trades at $151.39 U.S. a share.