Elliott Management Readies Potential New Fight With Hess Corp.
December 14 2017 - 5:07PM
Dow Jones News
By David Benoit and Bradley Olson
Elliott Management Corp. is readying for a potential new fight
with Hess Corp., hoping to either remove John B. Hess, its
billionaire second-generation chief executive, or push him to
consider selling all or part of the energy company.
Elliott, which owns a 6.7% stake in Hess, is also seeking
changes in how the company approaches shareholder returns, pushing
for a dividend cut in favor of stock buybacks, people familiar with
the matter said. The activist has told the company its
concerns.
Other big investors who asked to remain anonymous said they have
pushed for improvements in profitability, and believe Mr. Hess's
leash is short as he seeks time to develop one of the biggest
oil-and-gas finds in decades.
The hedge fund and the oil-and-gas company, both based in New
York, fought a nasty battle in 2013 that led to Mr. Hess giving up
his role as chairman and added Elliott nominees to the board. That
fight, which settled on the eve of the vote, helped spur the sale
of some Hess assets, including its brand-name gas stations.
Since then, the stock has underperformed, including slumping
heavily this year. Shares of Hess have lost 30% in 2017, including
dividends, despite a 21% rally in the S&P 500 and a 14% gain in
oil prices. It has fallen about 35% since the 2013 settlement,
compared with a 77% rally in the S&P 500 over that time.
"As long-term shareholders in Hess, we are frustrated by the
company's continuing underperformance," Elliott portfolio manager
John Pike said in a statement to The Wall Street Journal.
"Shareholders are getting impatient because the changes needed to
remedy Hess's severe undervaluation are substantial and need to be
announced without delay."
Hess has sold more than $3 billion in assets this year, and
executives met with more than 50 major shareholders in recent weeks
who were supportive of its strategy, Mr. Hess said in an
interview.
"The board and our leadership team is open to anything to
optimize the portfolio, as is evidenced by what we have done in the
last year," he said. "I don't think there's an oil company that has
done more to reshape the portfolio than we have."
James Quigley, Hess's chairman, said in an interview that "John
has the clear, unanimous and unambiguous support of our board as
our CEO."
Write to David Benoit at david.benoit@wsj.com and Bradley Olson
at Bradley.Olson@wsj.com
(END) Dow Jones Newswires
December 14, 2017 16:52 ET (21:52 GMT)
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