Hess Corporation (HES): $148.19
Deal Size: $60 billion
When I wrote about some of the new positions a group of eight arbitrage focused funds initiated in Q4 2023 in an article titled Concentrated Merger Arbitrage Funds – Q4 2023 Update two weeks ago, one of the things that stood out was their decision to get into two energy focused deals. Seven of the eight had a position in Exxon Mobil’s all stock acquisition of Pioneer Natural Resources (PXD) and four had a position in Chevron’s (CVX) acquisition of Hess (HES) in an all stock deal worth $60 billion.
As I mentioned in that article, the PXD deal had been rumored for several months and I could see some of them participating in a pre-deal situation. Their decision to participate in the Hess deal was however a surprise because I have rarely seen them participate in all stock deals. I mentioned the following in the article:
“Because this is an all stock deal, an investor would have to short Chevron stock to capture the spread. One of the funds also started a position in Chevron call options, potentially as a way to hedge their short position.”