Wk 6 Deliverable

Week Six Team Deliverable
The firm publically traded on the U.S. stock exchange that Team B will review is Hess Corporation. The Hess Corporation is an exploration and production company also conducting downstream business in marketing, gas stations, refining, and a terminal business. Earlier this year the company became a target by Elliot Management, a hedge fund who owned a large share of Hess stock. Elliot Management complained that Hess Corporation was not producing the shareholder value the stock had a potential to. The reason was based on capital allocation and too much focus on downstream businesses rather than the exploration efforts.
The demands of Elliot Management focused on reallocated capital used for downstream businesses and removing board members whom were either corporate officers or long-term corporate friends. Elliot Management’s main concerned was increasing shareholder value thus improving the hedge fund value. In an effort to force a change in the Hess Corporation, Elliot Management filed a proxy demanded a change within the corporation.
Facing a proxy battle John Hess, CEO of Hess Corporation announced that company would be selling the downstream businesses, releasing capital and the company also agreed to exchanging nine of the current board members. As a result of the agreement, the proxy was dropped and the stock responded. Polson (2013), “The shares have gained 30 percent this year, the fourth-best performance among the 43 companies on the Standard and Poor’s 500 Energy Index (Hess to Add Elliott Nominees to Board, Ending Proxy Fight).
A major strategic change the Hess Corporation is facing right now is entering into a contractual agreement with a company named Direct Energy. Hess is in an agreement to sell the energy marketing business to Direct Energy for $1.25 billion dollars. This sale is in response to the current changes in the economy, and the numbers Hess was looking for are just not happening right now….