On Friday, shareholders of Noble Energy Inc. are expected to approve its sale to Chevron. If realized, the deal would be the first major agreement since the coronavirus devastated the global fuel demand.
Proxy advisers Institutional Shareholder Services (ISS) and Glass Lewis have recommended approval of the deal. On the other hand, activist investor Elliott Management Corp, which took some stake in Noble, has not said how it would vote.
Based on Chevron’s price on Thursday, Noble is valued at around USD4.2 billion or USD8.58/share in the all-stock fashion. The value excludes about USD8 billion in debt.
David Katz, president of Matrix Asset Advisors, which holds Chevron shares, commented that Chevron is doing the transaction at a good time. “They are not stretching the balance sheet, they have not bet the company on it,” he said.
Previously, Noble had contacted eight firms when they were looking for a partner. It had held talks with six potential buyers already. However, following the deal with Chevron, no rivals had emerged.
Analyst Tom Ellacott of consultant Wood Mackenzie commented that Chevron is now in a strong position with not much competition.
If realized, the acquisition would spur Chevron’s US shale oil presence while also add almost 1 bcf of natural gas reserves.
