Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Goldman Sachs has appointed oil tycoon John Hess to its board of directors, the firm announced on Monday, just as the Wall Street investment bank advises his company on its $53bn takeover by Chevron.
The move comes as Goldman stands to make as much as $80mn in fees for helping Hess sell the family-run oil business in a contentious deal that has created a stand-off with ExxonMobil.
Hess shareholders last month approved its sale to Chevron, despite objections from some investors and proxy adviser ISS. But the deal’s close remains subject to an arbitration process with rival Exxon, which could drag into next year. It also remains subject to approval by competition regulators after the Federal Trade Commission launched a review in December. Goldman’s fee payment is contingent on completion of the deal.
The purchase of Hess by Chevron — the biggest in its history — hangs in the balance after the intervention by Exxon, which argues it has a right of first refusal over the company’s stake in a lucrative oil discovery off the coast of South America. Chevron has said it will pull the plug on the deal if the arbitration process finds in Exxon’s favour.
Goldman is the lead financial adviser to Hess in its acquisition by Chevron. The firm has also advised Hess on a number of other transactions in recent years, including the $2bn sale of its Russian assets and an $850mn deal for its storage terminals in 2013.
“Advising companies and their management teams is a core part of our business, and we’re thrilled to have John Hess, a long-standing client, join our board,” the firm said in a statement.
A senior Wall Street adviser said it was “very rare” for a senior executive who picked the adviser for the sale of his company to later join the board of an investment bank helping him in the sale process. Hess did not respond to a request for comment.
The appointment is also the latest change to Goldman’s board in the past 12 months, with Goldman veteran David Viniar taking over as lead director from Adebayo Ogunlesi, and Tom Montag returning to Goldman to join the board.
John Hess has served as chief executive of Hess since 1995. The company was founded by his father Leon in 1933 and grew over the ensuing nine decades into one of the biggest players in the industry.
Goldman chief David Solomon faced harsh criticism over his leadership of the firm last year, but the board stood by him.