Hess shareholders approve US$53b Chevron merger

Good morning. Here's what happened overnight and what you need to know today.

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1.

Votes for oil: Hess Corporation shareholders have approved the company’s USD53 billion ($80 billion) merger with the second largest US oil company, Chevron, during a special meeting of stockholders on Tuesday. The merger required a majority vote to approve the deal by a majority of Hess' 308 million shares outstanding to pass. The company did not immediately provide the vote tally. Energy giant Chevron first offered to buy Hess in October last year, in efforts to gain access to the lucrative Stabroek Block project in Guyana. Hess currently owns 30% of the project. The Chevron-Hess deal has evolved into a battle between the US’ two biggest oil companies after Exxon filed an arbitration claim arguing it had a right of first refusal to purchase Hess’s interest in the Guyana project, which would boost its own shareholding beyond its current 45% holding. Earlier this week, Guyana’s President, Irfaan Ali, has said he would support Chevron’s proposal to join the ExxonMobil consortium running the country’s USD150 billion offshore oil project. "Assuming Chevron wins the arbitration from Exxon or finds a settlement, the transaction is now going to happen," Mark Kelly, an analyst with financial firm MKP Advisors told Reuters. (Capital Brief)(Reuters)

2.

Running the clock: There are less than 24 hours on the clock before Anglo American and BHP hit the 5pm Wednesday (2:00am Thursday AEST) deadline to find a breakthrough on BHP’s optimistic USD49 billion takeover proposal. Anglo extended the talks by seven days after rejecting BHP’s third takeover big on Wednesday last week, and Bloomberg reports that BHP CEO Mike Henry has landed in London for a last ditch round of meetings with investors. The two sides have reportedly struggled to find a solution to BHP’s complicated transaction structure, as Anglo argues that spinning off its majority stakes in two South African miners creates too much risk for its investors, who will end up holding the shares. Anglo wants BHP to either change or compensate its shareholders for any loss of value as a result of the spinoffs. (Bloomberg)(Capital Brief)

3.

Israel-Hamas war: Gaza health officials say that 21 people were killed when Israeli tanks shelled the Al-Mawasi camp in an evacuation area West of Rafah on Tuesday. Israel has denied shelling the tent camp. The attacks came as Israeli forces continued their push into the Southern Gaza city, advancing to the centre of Rafah for the first time. Tuesday's attack occurred in an area designated by Israel as an expanded humanitarian zone, to which it had called on civilians in Rafah to evacuate for their own safety when it launched its incursion earlier this month. Palestinian medical officials have said that at least 12 of those killed on Tuesday were females. The attacks follow a wave of international outrage over Israel’s strikes on another tent camp in Rafah on Sunday night, which killed at least 45 civilians. Israel said it had targeted Hamas commanders and had not intended to cause civilian casualties. (Reuters)

4.

Secret dossier: A secret document designed to help Australian government ministers avoid questions was produced by the Department of the Prime Minister and Cabinet (PM&C). As Capital Brief revealed last month, Albanese’s office distributed template answers to questions on notice to multiple departments, which included advice to provide a “vague response” and to refer questions to other agencies. Senate estimates hearings on Tuesday heard that the “cheat sheet” for avoiding accountability was produced by the PM&C and had decided to consolidate its advice last year in consultation with Albanese’s office. Earlier this month Finance Minister Katy Gallagher stood by the document’s content and insisted that Albanese was unaware of its existence. Coalition Senate leader Simon Birmingham argued that the document amounted to a contempt of the Senate – a view backed by a former top judge – and that Albanese should have “torn [it] up” the moment he became aware of it. (Capital Brief)

5.

Stock supersale: The world's largest oil company, Saudi Aramco, is set to sell USD10-20 billion worth of stock in a long awaited offering, according to unnamed sources cited by the Wall Street Journal. Saudi Arabia owns over 82% of the Saudi Arabian Oil Co, known as Aramco, with the kingdom’s Public Investment Fund owning a further 16%. The remaining portion is owned by public investors. Aramco went public in 2019 in the world’s largest IPO to date, raising USD29.4 billion. If Aramco sells USD20 billion in the upcoming offering it would also be ranked near the top of record stock sales. An Aramco stock sale has been toyed with by Crown Prince Mohammad bin Salman for years, who has delayed the decision a number of times over uncertain economic circumstances. However, sources tell the WSJ that as markets reach record highs and with benchmark oil prices sitting comfortably over USD80 a barrel, the time appears right. The minority share sale is expected to be marketed to both domestic and international investors, and could come as early as June. (Wall Street Journal)

6.

Russian roulette: Russian President Vladimir Putin has warned of ‘serious consequences’ if Western countries allowed Ukraine to use their weapons, and that NATO members in Europe are playing with fire by proposing to let Ukraine use their weapons inside Russia. NATO Secretary General Jens Stoltenberg told the Economist that alliance members should let Ukraine strike deep into Russia with Western weapons, which is a position supported by some NATO European members, but not the US. "Constant escalation can lead to serious consequences," Putin told reporters in Tashkent in Uzbekistan on Tuesday. Putin also warned that sending French troops to Ukraine would be step toward global conflict and that smaller countries "should be aware of what they are playing with." French president Emmanuel Macron has previously opened the door to sending troops to Ukraine, and suggested in February Western troops could help to train Ukrainian soldiers in Ukraine. (Reuters)

7.

Network negotiations: T-Mobile is set to buy almost all of UScellular’s wireless operations, including customers, stores, and 30% of its spectrum assets. In a press release on the announcement, T-Mobile said it would acquire over four million of UScellular’s customer base, and will enter into a new licensing agreement for over 2,100 towers as well as extending the lease term for around 600 towers where T-Mobile is already a tenant. The deal will see T-Mobile pay approximately USD4.4 billion for the assets, in a combination of cash and up to USD2 billion in debt assumed by T-Mobile. T-Mobile said that customers of UScellular will gain access to its 5G network, which will be of particular appeal to those living in the more rural and underserved parts of the US. The transaction was unanimously approved but the board of UScellular and is expected to close in mid-2025, subject to the receipt of regulatory approvals. The share price of UScellular has climbed over 17.5% on the back of Tuesday’s news. (Capital Brief)

8.

Cash-flow criticism: Activist investor Elliott Investment Management has disclosed a USD2.5 billion stake in analog chipmaker, Texas Instruments, urging the company to improve its free cash flow. In a letter sent to the board of Texas Instruments disclosing its stake and criticisms of underperformance, Elliott claimed that since Texas Instruments launched a substantial ramp-up in capacity in 2022, its free cash flow has declined by more than 75%. Elliott added that shareholders have been given limited visibility or guidance on when free cash flow per share will return to its historical norm. According to the Wall Street Journal, Elliot is urging Texas Instruments to adopt a dynamic capacity-management strategy and set a per-share free cash flow target of at least USD9 for 2026, which would be 40% higher than current investor expectations. (Wall Street Journal)(CNBC)