Chevron to merge with competitor Hess in all-stock transaction valued at USD53
Date
10/24/2023 4:30:01 AM
(MENAFN) Chevron Corporation has unveiled its plans to acquire competitor Hess Corporation in a substantial all-stock transaction valued at USD53 billion. Chevron has characterized this Acquisition as a strategic move that will serve to enhance and diversify its already robust portfolio. One of the key assets in this acquisition is the Stabroek block in Guyana, which Chevron views as extraordinary due to its industry-leading cash margins and low carbon intensity. This asset is expected to contribute to production growth well into the coming decade. The acquisition also includes Hess' Bakken assets, further strengthening Chevron's presence in the US shale market alongside its existing operations in the DJ and Permian basins, with the aim of enhancing domestic energy security.
Chevron anticipates that this union will bolster production and generate free cash flow at an accelerated rate for an extended period, surpassing Chevron's existing five-year guidance. The deal, which has received unanimous approval from the boards of directors of both companies, is set to be finalized in the first half of the following year. The agreed acquisition terms dictate that Chevron will take possession of all outstanding shares of Hess in an all-stock arrangement, translating to a total value of USD53 billion, equivalent to USD171 per share based on Chevron's closing stock price as of October 20, 2023.
The agreement includes the provision that Hess Corporation's CEO, John Hess, will join Chevron's Board of Directors upon completion of the acquisition. Nevertheless, the deal's success hinges on receiving approval from Hess shareholders and the necessary regulatory clearances. Chevron's Chairman and CEO, Mike Wirth, sees this union as an opportunity to strengthen the company's long-term performance and reinforce its portfolio with the addition of world-class assets. Wirth emphasized the alignment of values and culture between Chevron and Hess, underlining their mutual commitment to safe and ethical operations, talent development, community contributions, and achieving superior returns with a focus on reducing carbon emissions. This substantial acquisition underscores the ever-evolving landscape of the energy industry and the strategic moves being made to secure advantageous positions and sustainable growth.
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