Exxon’s Challenge to Chevron-Hess Merger Tests Hedge Fund Resolve

investing.com:

Quiver Quantitative — Hedge fund managers, having wagered billions on Chevron (NYSE:CVX) acquisition of Hess (NYSE:HES), are steadfast in their bets despite potential complications arising from Exxon Mobil 's (NYSE:XOM) claim over Hess’s stakes in a Guyana oil project. This claim poses a new obstacle to Chevron's $53 billion acquisition, touted as the crown jewel for its strategic expansion. Exxon’s assertion of its preemptive purchasing rights over Hess’s share in the lucrative offshore development follows escalating geopolitical tensions between Guyana and Venezuela, adding layers of complexity to the already intricate acquisition process.

Millennium Management, Pentwater Capital Management, and Balyasny Asset Management, among others, remain undeterred in their investment stance, having acquired nearly an eighth of Hess’s shares by the end of December, amounting to over $5 billion. This steadfastness among major hedge funds, despite the growing uncertainties, underscores the allure and confidence in the deal's potential. The market, too, seems to be shrugging off these concerns, with the spread between Hess’s trading price and the value of the takeover offer narrowing significantly after Exxon's announcement, signaling growing investor optimism.

Market Overview: -Hedge funds have accumulated billions of dollars in Hess shares, making the Chevron-Hess deal a major play in the merger-arbitrage space. -Recent developments, including Exxon's claim and geopolitical tensions, have injected volatility into the deal.

Key Points: -Despite the complexities and risks, many hedge funds see the deal as more likely to close than not. -The difference between Hess's trading price and the offer value has narrowed, reflecting some