It's not uncommon for companies to announce mergers and acquisitions on Monday morning. That gives corporate legal teams time to finish up their due diligence over the weekend, and investor relations personnel have the chance to get comments from top executives and write up press releases heralding the advantages of the proposed deals.
Investors got news of two major acquisitions over the past weekend. Chevron's (CVX 0.37%) proposed merger with fellow oil and natural gas producer Hess (HES 0.67%) was by far the larger of the two, but it didn't get a very positive reception from shareholders on either side of the bargaining table. Meanwhile, it was a much smaller company, Textainer Group Holdings (TGH), that gave shareholders a nice short-term payday. Here are all the details you need on both mergers and acquisitions.
Chevron follows suit with Hess merger
Shares of Chevron dropped almost 3% in premarket trading Monday morning. The oil giant announced details of its merger plans with Hess, but even Hess shares weren't able to post a gain on the news.
The definitive agreement between the two oil and gas companies values Hess at $53 billion. The all-stock merger will give Hess shareholders 1.025 shares of Chevron stock for each Hess share they own, which works out to $171 per share based on Chevron's closing price from Friday afternoon.
Chevron argued that the acquisition of Hess will diversify its holdings. In particular, Hess has exposure to a valuable asset off the coast of the South American country of Guyana, and it also adds shale production capacity in the Bakken region of western North Dakota to Chevron's current positions in the Denver-Julesburg and Permian basins. Chevron is optimistic that the purchase will add to its free cash flow and enable it to boost dividends and stock buybacks over time.
The move follows rival ExxonMobil's all-stock acquisition agreement with Pioneer Natural Resources, which commanded a similar $59.5 billion valuation. It's increasingly evident that consolidation in the energy sector is a key to locking in valuable resources, but investors don't seem convinced that the move is that much of a positive for Chevron and Hess.
Textainer gets a sweet offer
Meanwhile, shares of Textainer Group Holdings had a reaction more typical of acquisition targets. Shares of the shipping container specialist soared 42% in premarket trading on Monday morning on news of takeover interest.
Textainer announced late Sunday night that it had entered into a definitive agreement under which alternative investment firm Stonepeak would acquire the company. Under the terms of the deal, Textainer will go private at the completion of the acquisition, with Textainer shareholders to receive $50 per share in cash for their stock. That implies a market capitalization of $2.1 billion for the company, with an enterprise value of $7.4 billion including Textainer's outstanding debt.
Textainer CEO Olivier Ghesquiere had a compelling explanation for making the deal: access to capital. Stonepeak has investors willing to put their money into attractive opportunities, and the alternative investment specialist appears to see the extensive capital expenditures Textainer has made to build out its asset base and its strong relationships with customers as positives worthy of further interest.
The supply chain challenges of the past several years boosted demand for Textainer's containers substantially, but worries about a global economic slowdown had weighed on the stock in recent months. Nevertheless, with the company having earned more than $6 per share in 2022 and set to see earnings of roughly $5 per share in 2023 and 2024, many will see Textainer as a value that was too good for a private investor like Stonepeak to pass up.