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Officials with Chevron Corp., headquartered in San Ramon, announced this week that they have finalized the details of a pending agreement to acquire the New York-based independent energy company Hess Corp. in a deal valued at $60 billion.
The announcement came Monday, with officials from both companies pointing to the advantages of the deal and outlining plans to work together, including Hess CEO John Hess being expected to join Chevron’s board of directors.
“This combination positions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets,” Chevron CEO Mike Wirth said. “Importantly, our two companies have similar values and cultures, with a focus on operating safely and with integrity, attracting and developing the best people, making positive contributions to our communities and delivering higher returns and lower carbon.”
The acquisition is also good news for investors, Chevron officials said, with the deal anticipated to increase long-term profits and stability for the company.
“Building on our track record of successful transactions, the addition of Hess is expected to extend further Chevron’s free cash flow growth,” Chevron CFO Pierre Breber said. “With greater confidence in projected long-term cash generation, Chevron intends to return more cash to shareholders with higher dividend per share growth and higher share repurchases.”
The deal was an “all-stock transaction” according to this week’s announcement, with Chevron acquiring $53 billion in outstanding Hess shares. Hess shareholders are set to receive 1.025 in Chevron shares for each Hess share according to the terms of the agreement. In addition to debt, the total value of the deal is $60 billion.
“Chevron has a world-class diversified portfolio of assets and one of the industry’s strongest balance sheets and cash return profiles,” CEO Hess said. “I believe our strategic combination creates a company that is stronger in every respect, with the leadership, asset portfolio and financial resources to lead us through the energy transition and deliver significant shareholder value for years to come.”
The boards of directors of both companies unanimously approved the deal, which is set to close in the first quarter of 2024 pending approval from Hess shareholders.
