A bid from the Chinese company may get more Unocal support, provided CNOOC fulfills certain requirements.
In the least surprising news item on the Unocal-Chevron-CNOOC triangle, Unocal has said it will consider supporting a bid from China National Offshore Oil Company under certain conditions.
CNOOC’s bid, an $18.5 billion USD all cash offer, easily trumps Chevron’s $16.5 billion cash and stock proposal. Unocal, like a Southern belle casting coy glances over her shoulder at competing suitors, is playing the two bidders against each other.
First, Unocal was supporting Chevron regardless of the CNOOC offer, qualifying that with the usual we-have-to-think-of-our-shareholders statement when CNOOC came along like the only flamenco dancer at a polka party with a more dazzling bid.
Now, according to the Financial Times, Unocal would consider that CNOOC bid, should Chairman Fu Chengyu have his company comply with US regulator requirements. Those could include a national security review, divestment of certain holdings, and other topics.
Mr. Fu has already publicly stated his company’s proposal would let Unocal keep more jobs than a Chevron acquisition of Unocal would. And Unocal’s domestically produced oil and gas, about 1 percent of US consumption, would only be sold in the US.
A spokesperson for China’s Foreign Ministry avoided a question in late June about how CNOOC came up with $7 billion in loans at either no interest or interest rates below market rates. It isn’t known how far CNOOC might raise its bid in the event Chevron matched its offer.
But Mr. Fu has been reported as saying CNOOC may be willing to raise its bid as well. Unocal shareholders value the company at a much higher value than both of the outstanding bids. They likely will be less inclined to support a Chevron recommendation when more money is sitting on the negotiating table.
David Utter is a staff writer for Murdok covering technology and business. Email him here.
