Hess Corp (HES.N) shareholders are set to vote on Tuesday on Chevron’s (CVX) proposed $53 billion acquisition of the company, but the decision faces growing calls for postponement from many investors. The deal has significant implications for both companies, as Chevron seeks to gain a foothold in Guyana’s lucrative offshore oil fields, while Hess faces an uncertain future as a standalone company if the deal fails.
The vote has been stalled by a regulatory review and an arbitration dispute with Exxon Mobil (XOM.N), which could push the deal’s closing to 2025 or result in its termination. The deal spread, a measure of investor confidence in the completion of the merger, has doubled to around $10, indicating greater perceived risk.
Exxon, which operates production in Guyana’s Stabroek Block with a 45% stake, along with CNOOC’s 25% stake, claim a right of first refusal on any Hess sale of its 30% stake in the block. This arbitration claim has thrown the Chevron acquisition into doubt.
Prominent shareholders, including Vanguard Group and BlackRock (BLK.N), which together hold 15% of Hess’ shares, could play a crucial role in the vote. Proxy firm Institutional Shareholder Services has recommended that shareholders abstain from voting, urging Hess to offer an incentive to shareholders due to the deal delay.
As of last week, shareholders owning about 40% of the combined shares were considering abstaining from the vote, effectively voting against the deal, as they believe finalizing the deal now would prevent the potential for better offers for their shares throughout the year.