According to a proxy filing, Chevron Corp’s has proposed a $5 billion offer to acquire a stake of at least 50% in U.S. oil major Noble Energy.
If Chevron manages to snag the deal, the all-stock merger will boost its U.S. shale oil holdings and provide it with a huge natural gas assets off the coast of Israel. Incidentally, Noble’s Leviathan, one of the world’s biggest offshore gas discoveries in the last decade, is already supplying gas to Israel, Jordan and Egypt.
According to a filing with the SEC on Tuesday, in 2019, Noble was looking for a partner to help it finance the multi billion-dollar investment required for Leviathan.
Earlier this year in February, Noble had denied Chevron an opportunity to visit the Leviathan facility; weeks later though, it had a change of heart and had agreed to a confidentiality agreement so as to begin discussions on joint operations in the region, states the filing.
With the global energy markets in the doldrums, Noble has reported a first-quarter loss of around $4 billion, with its board opting for a sale of the company rather than a regional partnership, reads the filing.
So far, it has contacted eight companies to gauge their interest in taking a stake in its Eastern Mediterranean holdings; it has also held talks with 6 potential buyers. According to the flings, the alternatives that Chevron was seeking were either “high risk” or “did not result in any material benefit,” states the filing.
Chevron’s bid valued Noble at $10.38 a share, a 7.5% premium to its closing price before the deal was disclosed. Including an assumption of debt, the price tag for the purchase is roughly $13 billion.
During negotiations, Chevron had agreed to raise its exchange ratio while Noble dropped a force-the-vote provision and had agreed to pay a higher termination fee in the event the deal did not go through.
The acquisition still has to face a vote by Noble shareholders; expectations are that it will be approved.