Hess Corporation
From Wikipedia, the free encyclopedia
| Hess Corporation | |
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| Type | Public (NYSE: HES) |
|---|---|
| Founded | 1919 |
| Headquarters | New York City |
| Industry | Oil and Gasoline |
| Products | Petrochemical |
The Hess Corporation (NYSE: HES) is an integrated oil company based in New York City. The company changed its name from Amerada Hess as of May 8, 2006. The company explores, produces, transports, and refines oil. Vertically completing the logistical chain, over 1,200 filling stations market gas to consumers primarily on the East Coast of the United States. Although towered over in size by enormous global players in the same industry, Amerada Hess placed a formidable #126 in the 2006 Fortune 500 rankings.
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[edit] History
Formed in 1919, the Amerada Corporation was a holding company for its principal subsidiary, the Amerada Petroleum Corporation. The oil producer experienced solid growth during most of the 1920s, hitting a peak in 1926 with a net income of USD 4.9 million. However, in the years leading to the Great Depression, weakness in the oil markets contributed to sluggish profits. The aftermath of the market crash aggravated the unsteady oil industry. In the first quarter of 1930, the company experienced a minor loss. The early years of the Depression was a struggle against wavering demand and overproduction in some regions. Later into the 1930s, the financial forecast became more sanguine for Amerada.
In December 1941, the company reorganized by merging the holding company with the principal operating subsidiary, Amerada Petroleum Corporation, into a simplified operating company. The new entity also adopted the former subsidiary's name.
Robust postwar growth rocketed the company past USD 100 million in sales in 1955.
Hess Oil and Chemical, an oil refiner and marketer founded by Leon Hess (who later owned the New York Jets), in 1966 acquired 10% of the company for USD 100 million after the British government sold its stake, which was amassed during World War II. Hess and Amerada would announce plans for a merger in December 1968. Some Amerada stockholders led by Morton Adler criticized the arrangement as being too favorable for Hess. Adler argued Amerada's oil reserves would contribute the lion's share of assets for the proposed company, so Amerada stockholders should retain more control of the new company. Before the stockholder vote on the matter, Phillips Petroleum, an integrated oil firm, approached Amerada with its own merger proposal, but the offer was declined in March. Still interested, Phillips nonetheless stated it would not carry out a proxy fight against the proposed Hess deal. Hess fearing such a strategy, made a cash tender offer of USD 140 million for an additional 1.1 million shares of Amerada, which would double its holding in the company. The new shares would be employed in a May stockholder vote deciding the merger's fate. The vote took place amidst shareholder rancor that in addition to echoing Adler's arguments, objected to Amerada's financing of the recently completed tender offer. Hess planned to cancel the shares and the cost of the acquisition would be absorbed by the newly formed company. One shareholder at the meeting quipped, "It looks to me as if Hess is buying Amerada with Amerada's money." Proponents of the deal won, and the USD 2.4 billion merger combining a purely production company with a refinery and marketer operation was completed. Although, controversy was not yet extinguished by the stockholder confirmation. A hess=hess class action federal lawsuit in 1972 claiming the proxy vote information was misleading. In 1976, a court agreed that the company falsely claimed to have considered each company's assets as a reason for the merger.
[edit] Trivia
- Since 1964, Hess's gas stations have sold a toy truck around Christmas time. Each year, the model changes to a new design. Older models are considered collectibles and typically sell for a few hundred or even thousands of dollars. For example, the 1964 truck sells for about $1,400-2,000, depending on condition. Hess periodically has a rare truck such as the 1995 and 2002 chrome which were given away at a stockholder meeting and, more recently, the 2006 truck given to New York Stock Exchange employees to commemorate its name change from Amerada Hess Corporation to Hess Corporation.
- Founder Leon Hess desired a clean look for his filling stations compared to local garages. Thus he chose a color scheme of green and white for them. These colors later became the colors of the New York Jets football team when he acquired them.
- Although the name comes from the founder's last name, Leon Hess, it is a common joke among employees that the name comes from their possible schedules: Holidays Evenings Saturdays and Sundays
[edit] References
- Benedict, Roger W. (May 16 1969). "Merger of Amerada Petroleum, Hess Oil, Valued at $2.4 Billion, Voted by Holders". Wall Street Journal, pg 4.
- "Court Rules Amerada's Holders Were Misled In Merger With Hess" (August 2, 1976). Wall Street Journal, p. 4.
