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Hess Corporation (NYSE:HES) shareholders voted in favor of a $53 billion sale to Chevron Corp (NYSE:NYSE: CVX), said acting consultant Glass Lewis.
Glass Lewis suggests Hess holders should vote in favor of selling to Chevron (CVX) in the May Hess vote The company raised capital on Feb. 28, according to recommendations from agency firms Seeking Alpha reviewed Thursday.
The Glass Lewis report comes after proxy service ISS on Monday recommended that Hess (HES) holders abstain from voting while awaiting more details from the ExxonMobil arbitration proceedings.NYSE:XOM) over a huge oil block off the coast of Guyana.
“We acknowledge that certain elements of the proposed merger may be less than ideal, including the lack of market examination before the companies signed, as well as transaction uncertainty caused by the Stabroek ROFR arbitration and ongoing antitrust review,” Glass Lewis wrote in its report road. “Having said that, overall, we believe the strategic and financial merits of the proposed merger are sound. By merging with Chevron, Hess expects shareholders to benefit from greater asset and geographic diversification, a stronger balance sheet and the ability to realize various operating and cost synergies.
While Glass Lewis recommends voting in favor of the deal, some shareholders are expected to abstain. At least five of the top 20 Hess (HES) shareholders are expected to abstain, a person familiar with the matter told Seeking Alpha on Thursday.
HBK Capital Management, one of HES’s largest shareholders, is expected to abstain from voting on the deal, Bloomberg reported on Monday, citing an interview with Nikos Panagiotopoulos, one of the firm’s partners. HBK has an economic interest in more than 8 million Hess shares.
Some Hess (HES) shareholders believe they were shortchanged in an all-stock deal with Chevron (CVX), especially given the coveted Guyana oil assets. Traders told Seeking Alpha earlier this month that some Hess shareholders believe the company’s share price would be higher if Chevron had not acquired the company.
“Hess shareholders will have the opportunity to participate in the potential future upside of the combined company by receiving newly issued Chevron stock as the sole form of merger consideration in the transaction,” Glass-Lewis wrote in the report. “Additionally, according to Goldman Sachs Based on the fairness opinion and the results of our own review, we believe the merger consideration provides shareholders with a relatively reasonable valuation and market premium for their Hess shares. Based on these factors, we believe the merger agreement deserves shareholder support at this time.
