Elliott Management, the New York-based activist hedge fund controlled by Paul Singer, is seeking to convince Noble Energy to back away from an agreement to sell itself for $5 billion Chevron, Bloomberg News reported on Wednesday, citing unnamed sources.
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Texas-based Noble agreed in July to be acquired in a deal that would bring the Israeli offshore gas fields Leviathan and Tamar under the control of one of the world’s biggest energy companies. Noble shareholders are scheduled to vote on the all-share deal on October 2.
The news follows hard on the heels of a report by Elliot that it had recently acquired a holding in Noble. The filing, dated September 4, did not disclose the size of the stake, but a notice posted on the U.S. Federal Trade Commission website on Tuesday showed the hedge fund had built a stake in Noble Energy.
Noble and Elliott were granted early termination under the FTC’s Hart-Scott-Rodino Act, which is a legal requirement when an investor buys shares in a firm above a certain threshold and seeks to hold discussions regarding strategy, management changes and other issues.
Bloomberg said Elliot contends that Noble agreed to the deal at the wrong time for the wrong reasons and that the company is better positioned to benefit from a recovery in oil prices if it remains independent. When the recovery happens, Noble should consider selling its Mediterranean assets, Bloomberg said, citing Elliot sources.
Elliott believes that Noble executives stand to make about $88 million in various forms of compensation from the deal, Bloomberg added.
In response to the Bloomberg report, Braden Reddall, the manager of external affairs at Chevron, said the company’s offer “represents a fair value for the business and that the transaction will create long-term value for shareholders of both companies.”
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“We continue to expect the transaction to close in the fourth quarter,” Reddall added.
Chevron has offered to pay a roughly 7.5% premium on what Noble’s shares were trading at in July, but Noble’s share price has plunged this year amid a rout in oil prices and the outbreak of the coronavirus. Since then, Noble shares have been trading even lower and on Thursday, they were down 0.3% late morning local time in New York at $9.49.
Elliott declined to comment. Noble Energy did not immediately respond to a Reuters request for comment.