Report: CNOOC May Raise Its Unocal Bid

AP via Yahoo! ^ | July 13, 2005 | AP

[Brilliant]

BEIJING (AP) -- Chinese oil company CNOOC Ltd. is considering raising its $18.5 billion bid for Unocal Corp., according to a published report Wednesday. The state-controlled company's board also was expected to consider making other changes to its bid, the Financial Times said, citing unidentified sources. It didn't say what the higher offer might be.

Spokesmen for Hong Kong-based CNOOC didn't immediately return telephone calls seeking comment.

A higher bid would reflect the state-controlled Chinese firm's determination to woo Unocal shareholders away from a competing bid of $16.6 billion by Chevron Corp.

"The board is unified. The board is interested in winning. Everyone is on the same page," the Financial Times quoted an unidentified person close to the Chinese offer as saying.

Unocal's 10-member board was expected to gather Wednesday to consider whether to recommend shareholders accept the CNOOC offer, revoking its earlier support for Chevron.

CNOOC and Unocal executives have been in talks on what changes to the Chinese bid might lead to it being declared superior to Chevron's by Unocal directors, according to the FT.

The Chinese firm says its all-cash offer is better than Chevron's promise of a mix of cash and stock because it would pay shareholders more and wouldn't result in as many job losses.

The CNOOC offer has prompted opposition from U.S. critics who say letting a Chinese state-controlled firm take over Unocal, the nation's ninth-largest oil company based in El Segundo, Calif., could endanger national security.

CNOOC has promised to cooperate with a U.S. government security review and says it would consider selling some assets in the United States and placing others under American control if necessary.

[Brilliant]

Like I've been saying, just extract the most money we can get out of them and let it go through. It's all about oil, and oil can be translated into dollars. If you get a good price for your oil, you can always buy other oil, or whatever else you want.

The notion that we are somehow going to increase our strategic leverage on China by precluding it from buying oil is ridiculous. If they don't buy our oil, then they will buy someone else's. It's just business. If you want to beat them at this game, you've got to wheel and deal.

Interestingly, just the other day, Unocal announced that it has sold its Canadian fields to Pogo Producing. So apparently, China is planning to increase its offer, even though it will be getting less oil, if the deal does go through. The deal is looking like a better deal economically as time goes by.