John Hess, the CEO of Hess Corp, is involved in one of his biggest struggles with the shareholders as he battles to save what may turn out to be the biggest deal in oil industry. While the proposed USD 53 billion sale of New York- based Hess Corp to Chevron Corp still lingers in the balance, Hess has up to Tuesday to tame a forming mutiny by shareholders concerning his management of the merger deal.
Currently at 70 years of age, the executive has been vigorously campaigning from meetings and using numerous telephone calls to gather the support of the investors. While the deal seemed safe back in the last fall, in recent weeks there has been observed a trend of unraveling of the stabilization of the opinion on the contracts and more and more investment funds voiced their critical opinions on the merger.
A host of challenges has cropped up, including a extended US federal regulatory review process and deep arbitration hiccup from Exxon Mobil latest, out of the about 40 % of the overall floating shares, which remain unrecommitted, as per the interviews conducted by the Reuters.
The increasing risks concerning certain factors have affected Hess Corp’s stake value where the company is down to USD 5 billion since the merger announcement. Each postponement of a particular quarter translates to more lost time for shareholders to enjoy dividends from Chevron, a factor that has exacerbated investors’ uncertainty.
Evaluating the recent transformations in UK’s BP and US’ Chevron, this commentator says, “This is the mother of all embarrassments”, a view shared widely with more and more investors panicking over the deal.
However, there are five major issues; three investment firms, namely HBK Capital Management, DE Shaw & Co, and Pentwater Capital Management have shown reluctance towards supporting the merger for Hess Corp indicating that they hold nearly 6% shares. Similarly, legal barriers have emerged with three shareholders filing cases that sought to stop the merger or delay the vote citing legal and regulatory concerns.
Hess still awaits the decision of the majority shareholder Vanguard Group, who owns 10% stakes in the company, but has not made its stance clear yet, and this has made Hess and its shareholders anxious as the deadline for the decision approaches.