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Hess shareholders have approved a $53bn takeover by Chevron, advancing a controversial acquisition at the heart of a high-profile brawl between America’s leading oil companies.
Investors on Tuesday voted to accept Chevron’s offer despite concerns over an arbitration process launched by rival ExxonMobil, which argues it has a right of first refusal over any sale of Hess’s stake in a prize oil find off the coast of Guyana.
“We are very pleased that the majority of our stockholders recognise the compelling value of this strategic transaction and look forward to the successful completion of our merger with Chevron,” said John Hess, chief executive of Hess.
Hess did not immediately release a tally of shareholder votes at the meeting.
Wall Street had been watching the vote closely after Institutional Shareholder Services, a leading proxy adviser, recommended that shareholders abstain, calling for a pause in the transaction until more information comes to light about Exxon’s arbitration over the deal. Three hedge funds had indicated ahead of the vote they would abstain.
Tuesday’s vote clears a crucial hurdle for the acquisition — the biggest in Chevron’s history — but its outcome remains subject to an investigation by the Federal Trade Commission and the arbitration case between Exxon and Chevron. Chevron has said it will walk away from the deal if the case finds in its rival’s favour.
Announced in October, the takeover was supposed to cap an epic nine-decade story that saw Hess develop from a tiny heating oil business into a global oil giant. It is the last big publicly listed family oil business in the US and the transaction valued the Hess family’s stake at $5bn.
But the deal was thrown into turmoil in March when Exxon filed for arbitration. The company claims the terms of a joint operating agreement over the Stabroek Block in Guyana — a vast oil project holding an estimated 11bn barrels of oil — give it pre-emption rights over the sale of Hess’s stake. Chevron and Hess disagree with Exxon’s interpretation of the contract.
Exxon has a 45 per cent stake in the development, while Hess and China’s Cnooc own 30 per cent and 25 per cent, respectively. Guyana’s president told the Financial Times this week that he would welcome Chevron’s involvement in the project and that Exxon gaining a controlling stake could be a cause for concern.
Chevron has said it expects the arbitration process to wrap up by the end of the year. Exxon says it could drag on into 2025.
A Chevron spokesman said on Tuesday it was pleased that a majority of Hess shareholders had voted to approve the merger.
“We anticipate moving the FTC regulatory process towards its conclusion in the coming weeks. We are confident our position on the pre-emption right will be affirmed in arbitration and are working to advance the process on this straightforward matter. We look forward to completing the transaction and welcoming Hess to our company,” the spokesman said.
Additional reporting by Jamie Smyth in Washington