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Chevron will agree to exclude the chief executive of Hess from its board if required by US regulators in order to get the merger of the two companies approved, said people familiar with the matter.
The US’s second-biggest oil company had planned to appoint John Hess a director as part of its $53bn acquisition of his company, the largest in its history.
But with a ruling by the US Federal Trade Commission anticipated by the end of this week, the people said Chevron was willing to keep Hess off the board in order to ensure the deal was approved.
Chevron and Hess did not respond to requests for comment. The FTC declined to comment.
It was not immediately clear why the FTC would seek to prevent Hess from joining Chevron’s board. In an unusual move, he was appointed in June to the board of Goldman Sachs, which is advising the company on the deal. His potential exclusion from the Chevron board was first reported by Bloomberg.
Any such agreement would mark the second major intervention by the FTC in an oil megamerger this year, after it required ExxonMobil to bar Scott Sheffield, the former Pioneer Natural Resources CEO, from its board as a condition to its approval of a $60bn tie-up, which closed in May.
In that case, the regulator accused Sheffield of trying to collude with the Opec cartel to drive up prices. Sheffield denied the allegations.
US President Joe Biden’s administration has ushered in tougher antitrust policy by appointing a new generation of progressive officials including Lina Khan, FTC chair.
Under Khan, the agency has cracked down on anti-competitive conduct in an attempt to course correct what she has described as decades of lax antitrust policy. It has launched enforcement actions as well as rulemaking aimed at reining in what it alleges to be unlawful dominance in corporate America.
The Chevron-Hess acquisition was announced last October during a flurry of dealmaking in US oil and gas. But it has developed into a closely watched corporate saga as various hurdles have sprung up to its completion.
Aside from the FTC investigation, launched in December, the deal has faced opposition from Exxon. Chevron’s larger rival has objected to the company’s acquisition of Hess’s stake in a lucrative Guyanese oil project at the heart of the transaction, arguing it has a right of first refusal.
Exxon has launched arbitration proceedings, delaying the closure of the deal even if it receives the FTC’s approval. A hearing has been set for May, with a ruling in the following three months. Chevron has said it will abandon the deal if the panel finds in Exxon’s favour.
Hess saw off a potential shareholder rebellion in May after a leading proxy adviser called for a pause in the transaction until more information came to light in relation to the arbitration process.
If completed, the takeover will cap a nine-decade epic when Hess grew from a small heating oil business into a global oil company. It is the last big publicly listed family oil business in the US and the transaction valued the Hess family’s stake at $5bn.