If a government national security review panel approves CNOOC’s plan to buy Unocal, Chevron will have to up the ante.
The Chinese energy company CNOOC bid $18.5 billion USD in an all-cash offer to purchase California-based oil and gas concern Unocal. Chevron had bid over $16 billion with a cash and stock proposal.
Chevron has been quiet on the deal since CNOOC’s entry into the bidding. If a government panel rejects the Chinese offer due to national security concerns, Chevron probably believes it has a clear field to make the purchase.
CNOOC has been working to build support for their offer. Its CEO has even publicly stated it would probably keep most of Unocal’s domestic jobs intact, where Chevron has made no secret of the consolidation it would do in the wake of an acquisition.
Politicians, especially those on the West Coast, have been handed a bit of a Catch-22 situation. Favor CNOOC and be accused of helping China increase its global power to the detriment of the US, or favor Chevron and anger the populace by opening the door to big local job cuts among the voters.
Government approval will force Chevron to make a choice. Either step aside, or increase its bid. Unocal shareholders believe the company’s value rests at around $70 per share, a price neither bid has touched yet. That leaves room for both sides, and perhaps even an entry from Royal Dutch/Shell, to make higher offers.
David Utter is a staff writer for murdok covering technology and business. Email him here.
