Big Oil's winning streak forces activists to regroup

Big Oil's winning streak forces activists to regroup

Months of tensions between oil giants and activist investors could reach a boiling point Wednesday at the annual meetings of Exxon Mobil and Chevron, as the U.S. giants pump record levels of crude and oil. sitting on bumper profits.

Facing another defeat, the climate groups that have been buying stocks to try to influence corporate behavior are now rethinking their strategies, Vivienne Walt reports for DealBook.

Activists' efforts to pressure Big Oil to clean up its polluting practices are faltering. Last week, protests against climate change rocked Shell's annual meeting in London. But the company easily saw off a size filed by Follow This, a Dutch shareholder activist group, and other investors, demanding that the oil giant is drastically tightening its climate targets.

Exxon could face an even fiercer fight this week – not only against the activist investors it is suing, but also against powerful institutional investors. They contain The huge Norwegian sovereign wealth fundAnd CalPERSthe California pension fund, both of which strongly oppose Exxon's attempt too quiet some of the most outspoken climate critics.

A summary: In January, Exxon sued two activist investor groups, Arjuna Capital and Follow This, in a Texas court. They said their resolution to include so-called Scope 3 emissions targets reflected an “extreme agenda” that was harmful to shareholders.

The groups withdrew their resolution, fearing that an Exxon legal victory could essentially silence all activist and shareholder debate. Last week, a judge from Texas ruled that Exxon's lawsuit could proceed against Massachusetts-based Arjuna, but said the court had no jurisdiction over Amsterdam-based Follow This. Exxon is still suing.

The activists regroup. They fear that Exxon's ultimate goal is to end the established practice of shareholder activist resolutions that go beyond climate. These votes also concern executive compensation, voting rights and other corporate governance issues.

One new idea: increase the pressure on Wall Street. “In general, we should be focusing much more on investors” than on oil giants who “just don't want to change,” Mark van Baal, the founder of Follow This, told DealBook. He said winning over pension funds and companies like BlackRock, Vanguard and State Street, which have significant stakes in oil companies, would give activists more influence.

But these companies are facing a separate response. Many have been vilified for embracing ESG investing or prioritizing environmental, social and governance principles. According to an RBC Capital report published last week, conservative think tanks have submitted a record 83 “anti-woke/anti-ESG proposals” this year.

Another complication: Van Baal said that major investment companies would rather have a private dialogue with oil companies about the climate crisis than support activist resolutions. “The oil industry has done a great job convincing investors they had to choose between climate and profits,” he said.

  • In other energy news, Saudi Arabia reportedly hopes to do just that raise as much as $10 billion next month by selling shares in the oil giant Saudi Aramco. And Irfaan Ali, the President of Guyana, told The Financial Times that he was open to Chevron drilling for oil alongside Exxon in the country's lucrative but disputed reserves.

Closing arguments in Donald Trump's hush money trial will begin on Tuesday. The jury could begin deliberating as soon as Wednesday. Prosecutors say the former president brokered a $130,000 deal to silence porn star Stormy Daniels in an effort to protect his 2016 presidential campaign. Elsewhere, as legal costs mount, the Trump Organization has reportedly done just that sold one of Trump's private jets to a Republican megadonor.

Apple shares rise on positive sales report in China. The tech giant's shares gained more than 2 percent in premarket trading after a Bloomberg report that iPhone transmissions have been restored in Apple's second-largest market over the past month. Chinese consumers have cut back on spending in recent months, and local brands have undermined Apple's leading position. The latest data offers hope that Apple's sales slump in China may be coming to an end.

Melinda French Gates unveils her latest giving pledge. The co-founder of the Bill & Melinda Gates Foundation announced she would Spending $1 billion to support women's rights in the US and abroad. The revelation is French Gates' first since announced that she would leave the foundation she founded with Bill Gates, her former husband.

Elon Musk's artificial intelligence startup raises billions. The technology magnate announced this on his social media platform this weekend xAI had raised $6 billion from investors including Andreessen Horowitz and Sequoia Capital, along with Saudi Arabia's Prince Alwaleed bin Talal, who value the company at $18 billion. Musk is playing catch-up to companies like OpenAI, Anthropic and others who have raised huge sums in the past year to help commercialize their AI systems.

Adam Neumann has officially admitted defeat in his dream to buy back WeWork. DealBook is the first to report that Neumann has ended his bid to acquire the co-working company he co-founded in 2010 and built into a $47 billion global business before it filed for bankruptcy last year.

Here is his statement to DealBook: “For several months we tried to work constructively with WeWork to create a strategy that would allow it to thrive. Instead, the company appears to be emerging from bankruptcy with a plan that appears unrealistic and unlikely to succeed.”

The writing had been on the wall for weeks. Neumann stepped down as CEO of WeWork in 2019 after the company failed to go public amid questions about its business model and corporate governance. But in February, DealBook reports this that Neumann was planning a bold move to buy back the company.

His new real estate company, Flow, which is backed by venture capital firm Andreessen Horowitz, among others, bid more than 500 million dollars. The plan was to buy WeWork or its assets and inject bankruptcy financing to stay afloat.

WeWork found another lifeline and froze Neumann. A US bankruptcy judge last month approved a restructuring agreement essentially wiping out $4 billion in corporate debt. It also included $450 million in new financing from SoftBank, the Japanese tech investor that has backed WeWork since its inception, helping the company emerge from Chapter 11 bankruptcy.

WeWork has been busy renegotiating leases in an attempt to divest them $11 billion in lease obligations. The rise of hybrid working since the early days of the corona pandemic has hit the commercial real estate sector hard. A rise in vacancies has helped companies like WeWork rework deals with landlords, but it also calls into question the growth potential of the shared workspace business model.

The bidding war over Vista Outdoor is about to enter a new round. The parent company behind ammunition brands such as Remington and CamelBak water bottles will announce Tuesday that the Czechoslovak Group, a Prague-based defense company, has increased its offer to $1.96 billion.

Vista hopes this will be enough to fend off a separate bid from MNC Capital, an investment firm linked to Mark Gottfredson.

Vista is expected to say CSG's new proposal is better for shareholders. CSG has added about $50 million to its offering, and Vista will also announce it will pay out an additional $130 million to investors after a strong fourth quarter.

How we got here: Vista agreed to sell its ammunition business to CSG for $1.9 billion, leaving Revelyst, its non-firearms division, as a standalone government company. In March MNC offered $3 billion for the entire company. Last month, Vista agreed to talk to the company but canceled the MNC offer underrated Revelystand it pushed for a higher bid.

Vista is now expected to reject MNC's offer. The company is expected to say it has not yet received a better offer or committed financing, even though it shared confidential material with MNC after agreeing to talk to the company.

CSG's revised offer does not resolve the national security cloud hanging over any deal. The CSG deal is under review by the Committee on Foreign Investment in the United States, the interagency body that assesses the national security implications of foreign investments in U.S. companies.

MNC is not subject to such assessment because it is a US company. But it highlighted these concerns in correspondence with CFIUS, saying the CSG deal would give an overseas company control over the West's supply of a key ingredient in ammunition. MNC has also argued that its offer grants Revelyst $1.1 billion in enterprise value, almost double the $570 million implied in the original CSG deal.

— RansomHub, a hacking group, said Monday that it was behind a major cyberattack on Christie's website, days before the auctioneer was set to begin its spring sales. The group also claimed to have obtained sensitive information about wealthy art collectors that they planned to release in late May.

Inflation numbers will emerge again this week. Here you can read what you should pay attention to.

Tuesday: The Conference Board releases its monthly consumer sentiment index, and Cava, the restaurant chain, reports first-quarter results amid a torrid rally in its shares.

Hess shareholders will vote on Chevron's $53 billion acquisition of the oil company.

Wednesday: The Fed's beige book, detailing economic activity in twelve districts, will be released soon. HP and Salesforce report quarterly figures.

And it's the deadline for BHP Group to make a formal bid for Anglo American, a rival mining giant.

Thursday: Dell, Dollar General and Marvell Technology publish quarterly results.

Friday: Wall Street will be closely watching the release of the Personal Consumption Expenditures report, the Fed's inflation measure. Similarly, investors will receive the consumer price index data for the eurozone, the last major inflation report ahead of the European Central Bank's rate-setting meeting next week.

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