Hess’ $53 billion takeover of Chevron is facing opposition

Chevron is a large oil company based in California that wants to acquire Hess, a large oil company based in New York, for $53 billion. Reuters reports that the matter will be put to a vote before Hess shareholders on Tuesday, but it is unclear whether the deal will go through. There is more opposition than expected. This opposition comes from Hess’s shareholders and prominent politicians, and the main obstacle is the dispute with ExxonMobil.

Dispute with Exxon

Chevron’s oil competitor, Exxon, has initiated legal action that could make it more difficult for Chevron to realize the full value of the Hess purchase. There is a large oil field off the coast of Guyana in which both Exxon and Hess are interested. Chevron believes it should be able to acquire Hess’ portion of the discovery. Exxon believes it should have first ratings. Exxon asked an arbitrator to review the matter.

If Exxon has its way, Chevron will lose access to a truly valuable resource.

Antitrust concerns

Nowadays, more and more mergers are causing concern among government agencies and politicians. JetBlue Airways and Spirit Airlines had to cancel a much smaller merger earlier this year, after a Justice Department lawsuit led to a judge blocking the deal. A few weeks ago, Bloomberg ReportSen. Chuck Schumer, a New York Democrat and the powerful Senate majority leader, called on the Federal Trade Commission to “slam the brakes” on the deal because it would give Chevron too much control in the energy market.

For what it’s worth, the FTC was reviewing but approved this month Exxon’s larger takeover of Pioneer Natural Resources – after Pioneer’s founder was forced out based on (deniable) suspicions of oil price collusion.

Shareholder objections

Reuters reports that due to high uncertainty surrounding the deal, several large Hess shareholders have said they are not ready to give it the green light. A proxy adviser to ISS, which helps institutional investors learn how to vote their shares, says they should hold off on approval until the Exxon arbitration and antitrust situations are resolved.