The world of M&A is heating back up after a long drought—and the big kahunas are remaking entire industries through gigantic deals.
The International Chamber of Commerce gave Chevron the green light to complete its $53 billion acquisition of Hess, the Wall Street Journal reported this morning, thwarting ExxonMobil’s attempt to block the merger.
The oil titans have been batting over the lucrative $1 trillion Stabroek oil field in Guyana, which is currently operated by a group of industry giants, including ExxonMobil, Hess, and China’s CNOOC. Exxon tried to block Chevron’s acquisition of Hess, arguing that it should get the right of first refusal over Chevron to buy Hess’s stake of the oil field.
For background: ExxonMobil currently has a 45% stake in the Guyana project, while CNOOC owns 25%. Chevron, through its purchase of Hess, now gets access to 30% of the field, which these companies say will produce 1.2 million barrels of oil per day by 2027.
The win is a lifeline for Chevron, which is down about 7.39% over the past 12 months, and has been falling behind its rivals in recent years. Last year saw its oil reserves sink to their lowest level in a decade.
Chevron slumped 1.69% today, Exxon dropped 3.49%, and trading on Hess was halted before the market opened this morning.
The trains are back on track
In other M&A news, Union Pacific is reportedly in talks to acquire its smaller competitor Norfolk Southern. Union Pacific is the biggest freight railroad operator in the country, with a market cap of roughly $140 billion, while Norfolk is the smallest, and has a market cap of $60 billion. If approved, the new entity would become the largest railroad in the country.
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Combining the two would instantly create the only transcontinental rail route operated by a single company in the US. The CEO of Union Pacific, Jim Vena, has touted the benefits of a coast-to-coast transcontinental railroad, including a more streamlined shipping process, given packages wouldn’t need to be transferred between different rail companies.
Shares of Norfolk Southern rose 2.55% on the news, while Union Pacific declined 1.2% today.
The companies have not commented on the reports, and there’s no guarantee that the deal will go through, especially given scrutiny from the Surface Transportation Board, the US railroad regulatory body. If the two do merge, however, it would be the biggest corporate deal this year, according to the WSJ.—LB