Chevron Corp., San Ramon, Calif., has entered into an agreement to purchase Hess Corp., New York, in an all-stock $53 billion deal that will result in a combined oil and gas company with just over $33 billion in retirement plan assets.
The transaction, which was announced in a joint Oct. 23 news release, has been unanimously approved by both firms' boards of directors and is expected to close in the first half of 2024.
Under the terms of the agreement, which is pending Hess shareholder approval, those shareholders will receive 1.025 Chevron share for each Hess share. According to the news release, the total enterprise value of the deal — including debt — is $60 billion.
When completed, the combined organization will have about $19.5 billion in 401(k) plan assets, and $13.7 billion in defined benefit plan assets.
As of Dec. 31, Chevron Corp. had $18.6 billion in 401(k) plan assets, according to the most recent 11-K filing. Hess Corp. had $903 million in 401(k) plan assets as of that date, according to its most recent 11-K filing.
As of Dec. 31, Chevron Corp. had $7.94 billion in U.S. pension plan assets, with $9.71 billion in projected benefit obligations, for a funding ratio of 81.8%, according to its most recent 10-K filing. Also as of that date, Chevron's international pension plan assets totaled $3.29 billion, with PBO of $3.354 billion, for a funding ratio of 97.8%, according to the filing.
As of Dec. 31, Hess Corp. had $2.45 billion in combined U.S. and U.K. pension plan assets, and $1.802 billion in projected benefit obligations, for a funding ratio of 136%, according to its most recent 10-K filing.
Hess Corp. has completed several pension buyout transactions in the last several years. It purchased two group annuity contracts in the second quarter of 2022 from undisclosed insurance companies for a total premium price of $250 million to transfer liabilities from two U.S. pension plans.
The company purchased one contract at a cost of about $170 million using plan assets from the Hess Corp. Employees' Pension Plan and about $80 million using plan assets from the HOVENSA Legacy Employees' Pension Plan. Also for the latter plan, the company distributed lump sums totaling $20 million to "certain participants" to "settle the plan's projected benefit obligation," the company said in an August 2022 10-Q filing with the SEC.
Hess in 2019 had purchased a group annuity contract from Massachusetts Mutual Life Insurance Co. to transfer $270 million in U.S. pension plan liabilities, all from the Hess Corp. Employees' Pension Plan.
The Oct. 23 news release does not disclose whether the companies have had any discussions about merging the retirement plans. Fidelity Investments is record keeper for both the Chevron and Hess 401(k) plans.
