Unocal takes Chevron bid, snubs China's CNOOC
Unocal takes Chevron bid, snubs China's CNOOC
Agence France-Presse, Los Angeles/Beijing
U.S. oil firm Unocal said on Wednesday it had accepted an
improved takeover bid by Chevron of US$17.1 billion, snubbing a
higher but politically controversial bid from China's state-owned
CNOOC.
Unocal, the ninth-largest U.S. oil company, and Chevron
jointly announced the merger agreement, which will be submitted
to a vote by Unocal shareholders on Aug. 10.
Unocal had already agreed a merger with Chevron in April when
it received a rival bid in June of $18.5 billion in cash by China
National Offshore Oil Corp. (CNOOC), the country's third-largest
oil group.
But the Chinese bid touched off a firestorm of controversy
among some U.S. lawmakers and the American public, and prompted
calls for Congress to intervene to block the move.
The sweetened bid by Chevron represents an overall value of
$63.01 per share of Unocal common stock based on the closing
price of Chevron stock on Tuesday.
Chevron's previous offer was for $60.51 in cash and stock.
By contrast, CNOOC's cash offer amounted to $69 a share.
Members of the House of Representatives' Armed Services
Committee had said an acquisition by CNOOC would give Beijing
access to a strategically vital asset and should be blocked.
The U.S. lawmakers' move drew an outcry from the Chinese
government, which condemned the lawmakers' initiative as
political interference in what it insisted was a strictly
business deal.
"The Unocal board of directors recommends that Unocal
stockholders vote in favor of adopting the Chevron merger
agreement, as amended, at the special meeting of stockholders
scheduled for Aug. 10, 2005," Unocal said in the companies' joint
statement.
Chevron's revised offer consists of 40 percent cash and 60
percent stock, with the company paying about $7.5 billion in cash
and issuing about 168 million shares.
It gives Unocal shareholders three options for each share
held: to receive $69 in cash; 1.03 shares of Chevron common
stock; or a combination of $27.60 in cash and 0.618 of a share of
Chevron common stock.
CNOOC insisted that its bid for Unocal was the best on the
table after the U.S. oil major snubbed it in favor of U.S. peer
Chevron.
"We think that our full-cash offer is still superior even
after Chevron raised its bid," a spokesman for the company said
in Beijing.
The official said he only learnt of Unocal accepting an
improved takeover bid by Chevron of $17.1 billion via the
Internet.
The spokesman, quoted by Xinhua news agency, said the Chinese
company was expected to give an official response soon.
Dealers in Hong Kong, where CNOOC is listed, said that despite
the seeming setback, its stock prospects will actually improve if
it withdraws from the Unocal bid.
"CNOOC's failure to take over Unocal will be a big positive
for investors," said Ken Li, an analyst at China Everbright
Securities.
Unocal, based in the Los Angeles suburb of El Segundo, is one
of the world's leading independent energy companies, specialized
in the exploration and production of oil and natural gas, but it
lacks refining operations and a distribution network.
Unocal employs about 6,000 people worldwide, mainly in North
America and Asia. Most of its oil and gas assets are in Asia,
notably in Thailand, Indonesia and central Asia.
The company posted 2004 net profit of $1.2 billion on sales of
eight billion.
Its bigger, friendly suitor Chevron reported net profit of
$13.3 billion for the same year on sales of 155.3 billion.