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Chinese Oil Company Stands Behind Unocal Bid

NEW YORK -- The government-owned China National Offshore Oil Corp., known as CNOOC, will press ahead with a takeover bid for Unocal Corp. despite a scheduled vote on a competing offer by Chevron Corp., CNOOC's chairman said Thursday, The New York Times reported.

The chairman, Fu Chengyu, expressed confidence the Chinese company would persuade Washington its proposed $18.5 billion deal does not pose any risks to U.S. national security.

"We'll continue to talk in negotiations, and we will meet with government figures for the review," Fu said. "I believe that our superior offer, which will help shareholders, will convince the U.S. government this is a good offer."

The U.S. Securities and Exchange Commission on Wednesday cleared Chevron's $16.4 billion offer, Chevron said, and the regulatory go-ahead opened the way for a vote by Unocal shareholders on the Chevron offer, which will take place Aug. 10.

However, the Chevron deal is not assured because Unocal received a higher offer last week from CNOOC.

Chevron hopes a quick vote on the issue will thwart the $18.5 billion Chinese bid, but as the company pressed ahead, CNOOC executives and Unocal managers met in New York to discuss the unsolicited bid that the Chinese company made, according to the report.

The offer by CNOOC, which came more than six months after it started talks with Unocal's management, has provoked sharp political reaction in Washington, where some members of Congress are opposed to the acquisition of American-owned oil assets by a Chinese company, according to The New York Times. The issue is especially contentious at a time of near-record-high oil prices that have prompted concern over the reliability of energy supplies.

Chevron, which is based in San Ramon, California, is betting that Unocal shareholders will favor its offer because they will consider it a safer option than one involving potentially protracted regulatory and government scrutiny of CNOOC.

Chevron also still has the support of the Unocal board, which backed its offer in April, although it could switch its recommendation after considering the Chinese bid.
David O'Reilly, chairman and chief executive of Chevron, said in a statement Wednesday that "the successful completion of U.S. regulatory requirements demonstrates that our transaction can be brought to a quick and successful conclusion."
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