Proxy firm advises Hess investors to abstain from voting on $53 billion Chevron deal amidst ExxonMobil arbitration

Crystal Tse and Kevin Crowley, Bloomberg May 13, 2024

(Bloomberg) – Influential proxy giant Institutional Shareholder Services Inc. recommended Hess Corp. investors abstain from voting on the proposed $53 billion acquisition by Chevron Corp. Shares of both oil companies fell.

ISS cited concerns about the deal’s valuation, process and uncertainty around its timeline given the ongoing arbitration case between Exxon Mobil Corp. and Chevron over Hess’ stake in a Guyanese oil project. Shareholders should vote in favor of an adjournment proposal to allow “more time” for arbitration to play out, ISS said.

Chevron declined as much as 1.7% after the report was released. Hess dropped 0.8%.

Hess’ decision to pursue exclusive negotiations with Chevron is difficult to overlook due to the “modest” implied premium of the transaction, ISS wrote. Meanwhile, the arbitration case means that Hess shareholders “bear the risk of a potentially broken deal without any compensation.”

Hess investors are due to vote on the deal on May 28. Neither Chevron nor Hess immediately responded to requests for comment.

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