DEFM14A: Chevron's Acquisition of Hess: Stockholder Vote Approaching

Hess Corporation is holding a special meeting on May 28, 2024, for stockholders to vote on the proposed merger with Chevron, where Hess stockholders will receive 1.025 shares of Chevron common stock for each share of Hess common stock.

Summary

• Hess Corporation stockholders are being asked to vote on a proposal to adopt the merger agreement with Chevron, where Hess will merge into a wholly-owned subsidiary of Chevron.
• If the merger is completed, Hess stockholders will receive 1.025 shares of Chevron common stock for each share of Hess common stock they own.
• The Hess Board of Directors has unanimously approved the merger agreement and recommends that Hess stockholders vote in favor of adopting the merger agreement.
• The transaction price represents a premium of approximately 10.3% on a 20-day average based on closing stock prices on October 20, 2023.
• Upon completion of the merger, former Hess stockholders are expected to own approximately 14.7% of the then outstanding Chevron common stock, based on Chevrons outstanding equity as of April 19, 2024.
• A special meeting of Hess stockholders is scheduled for May 28, 2024, to vote on the merger agreement.
• The Hess Board has fixed April 12, 2024, as the record date for determining stockholders eligible to vote at the special meeting.
• The merger requires the affirmative vote of holders of a majority of the outstanding shares of Hess common stock entitled to vote.
• The Hess Board unanimously recommends that Hess stockholders vote FOR the merger proposal, FOR the merger-related compensation proposal and FOR the adjournment proposal.

Sentiment

Score: 7

Explanation: The document is largely factual and positive, outlining the details of the merger and the board's recommendation. However, it also acknowledges potential risks and uncertainties, preventing a higher sentiment score.

Positives

• The Hess Board believes the merger is fair to and in the best interests of Hess stockholders.
• The merger consideration represents a premium for Hess stockholders.
• Hess stockholders will have the opportunity to participate in the value and opportunities of Chevron.
• The combined company is expected to have greater scale and financial strength.

Negatives

• The value of the merger consideration will fluctuate with the market value of Chevron common stock until the transaction is complete.
• The merger is subject to conditions, and may not be completed.
• Hess stockholders will have a reduced ownership and voting interest in the combined company.

Risks

• The merger is subject to regulatory approvals, which may impose conditions.
• The exchange ratio is fixed and will not be adjusted for changes in stock prices.
• The opinion of Hess' financial advisor will not reflect changes in circumstances between signing and completion.
• Hess may be unable to attract or retain key employees during the pendency of the merger.
• Potential litigation could result in substantial costs or prevent the completion of the merger.
• The shares of Chevron common stock to be received by Hess stockholders upon completion of the merger will have different rights from shares of Hess common stock.

Future Outlook

Chevron and Hess anticipate obtaining all requisite stockholder and regulatory approvals by the middle of 2024, but the arbitration relating to the Stabroek ROFR may cause the transaction to be completed at a later time or to fail to be completed.

Management Comments

• The Hess Board has unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to and in the best interests of the Hess stockholders.
• The Hess Board unanimously recommends that Hess stockholders vote FOR the merger proposal, FOR the merger-related compensation proposal and FOR the adjournment proposal.

Industry Context

This announcement reflects ongoing consolidation trends in the oil and gas industry, with larger companies seeking to acquire reserves and production capacity.

Comparison to Industry Standards

• The document references Goldman Sachs' fairness opinion, which considered comparable companies and transactions.
• The document mentions the 10.3% premium on a 20-day average based on closing stock prices on October 20, 2023, which can be compared to premiums in other recent merger transactions in the oil and gas industry.
• The document mentions that the termination fee of $1,715,000,000 is reasonable in light of the circumstances and the overall terms of the merger agreement, consistent with fees in comparable transactions.

Legal Proceedings

• A complaint has been filed in federal court alleging deficiencies in the preliminary proxy statement.
• Arbitration proceedings have been commenced regarding the applicability of the Stabroek ROFR to the merger.

Stakeholder Impact

• Hess stockholders will receive Chevron common stock if the merger is completed.
• Hess employees may experience uncertainty about their future roles.
• Customers, suppliers, and other business partners may delay or defer business decisions.

Next Steps

• Hess stockholders will vote on the merger proposal at the special meeting on May 28, 2024.
• Chevron and Hess will continue to work towards obtaining regulatory approvals.
• Hess is seeking to have the merits of the arbitration heard by the third quarter of 2024 and to complete the arbitration by the end of 2024.

Key Dates

Keywords

Merger, Chevron, Hess, Stockholders, Agreement, Common Stock, Merger Agreement, Acquisition