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NEW YORK -- Investor group Elliott Management purchased a 4-percent stake in Hess Corp. and will strongly encourage the oil company to split itself into three parts and sell its entire convenience store and gas station operations.
To further encourage Hess to sell its sell its retail business and spin off businesses, Elliott Management nominated five of its executives to Hess' board of directors.
The 4-percent stock ownership stake is second only to Chairman and CEO John B. Hess' stake in the company. Elliott Management argued that splitting off into three parts and selling its entire division could raise the company's stock price to $126, about twice the price it trades for today.
The investor group added that Hess' board of directors failed to "oversee management and hold it accountable for over a decade of failures," reported Bloomberg News.
Yesterday, Hess said it would exit the refining business but affirmed its long-term commitment to its retail division.
As for the split up of the company, Elliott Management wants Hess to spin-off its lucrative acreage in the Bakken shale of North Dakota, as well as forming different divisions for its upstream and downstream operations.
"We believe Hess would emerge as a marquee collection of long-life oil (or oil-linked) assets," Elliott Management stated, according to the news outlet.
Investors cheered the news of the potential Hess breakup. Shares of the company traded 10 percent higher on the New York Stock Exchange this morning.
The topic is expected to be addressed during Hess' earnings conference call, scheduled to take place at 10 a.m. Eastern Standard Time tomorrow morning.
This is not the first time an activist investor or group has asked a company to spin off or sell its c-store and gas station business. Dan Loeb encouraged Murphy Oil Corp. to take a similar action last year, and the company later agreed.
The retail spinoff, called Murphy Oil USA Inc., is expected to be completed this year.