Chevron will leave John Hess off its board to get the merger approved

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Chevron will agree to remove Hess’ chief executive from its board if requested by U.S. regulators to get approval for the merger of the two companies, people familiar with the matter said.

The second-largest U.S. oil company had planned to name John Hess as a director in its $53 billion acquisition, the largest in its history.

But with a decision by the U.S. Federal Trade Commission expected by the end of this week, the people said Chevron is willing to keep Hess off the board to ensure the deal is approved.

Chevron and Hess did not respond to requests for comment. The FTC declined to comment.

It was not immediately clear why the FTC would seek to prevent Hess from joining Chevron’s board. In an unusual move, he was appointed in June to the board of Goldman Sachs, which is advising the company on the deal. His potential ouster from Chevron’s board was first reported by Bloomberg.

Any such settlement would mark the FTC’s second major intervention in an oil megamerger this year, after it asked ExxonMobil to remove from its board Scott Sheffield, the former CEO of Pioneer Natural Resources, as a condition for approval of a $60 billion tie-up. up, which closed in May.

In that case, the regulator accused Sheffield of trying to collude with the OPEC cartel to raise prices. Sheffield has denied the allegations.

US President Joe Biden’s administration has introduced a tougher antitrust policy by appointing a new generation of progressive officials, including Lina Khan, the chairman of the FTC.

Under Khan, the agency has cracked down on anticompetitive behavior in an attempt to correct what it described as decades of lax antitrust policy. It has launched enforcement measures as well as regulations aimed at curbing what it claims is illegal dominance in corporate America.

The Chevron-Hess acquisition was announced last October during a flurry of US oil and gas deals. But it developed into a closely watched corporate saga as various obstacles arose to its completion.

In addition to the FTC investigation, launched in December, the deal faced opposition from Exxon. Chevron’s larger rival has opposed the company’s purchase of Hess’ stake in a lucrative Guyana oil project at the heart of the deal, arguing it has a right of first refusal.

Exxon has launched an arbitration proceeding, delaying the closing of the deal even if it receives FTC approval. A hearing has been set for May, with a decision within the next three months. Chevron said it would abandon the deal if the panel finds in Exxon’s favor.

Hess revealed a potential shareholder revolt in May after a senior proxy adviser called for a hold on the deal until more information came to light about the arbitration process.

If completed, the takeover will end a nine-decade saga as Hess grew from a small heating oil business to a global oil company. It is the last major family oil venture to go public in the US, and the deal valued the Hess family’s stake at $5 billion.