SHANGHAI -- China National Offshore Oil Corp. (CNOOC) abandoned its $18.5-billion, all-cash offer to acquire U.S. oil and gas producer Unocal Corp. yesterday, clearing the way for an already agreed deal with U.S. oil major Chevron Corp., according to a report in USA TODAY. Unocal's board has endorsed Chevron's offer, and its shareholders are set to vote on the deal Aug. 10.
CNOOC made its bid June 22, beating a cash-and-stock offer from Chevron, but intense political opposition stood in the way of the CNOOC bid from the start. CNOOC' is 70% owned [image-nocss] by the Chinese government.
CNOOC said Tuesday that it considered raising its bid, and "would have done so but for the political environment in the U.S."
CNOOC's bid sparked concerns in Congress that the proposed deal presented risks to U.S. economic and national security. A flurry of legislation intended to derail CNOOC's offer was introduced in both houses of Congress.
In a statement Tuesday, the Chinese oil company said "the unprecedented political opposition that followed the announcement of our proposed transaction was regrettable and unjustified. This is especially the case in light of CNOOC's purely commercial objectives and the extensive commitments that CNOOC was prepared to make to address any legitimate concerns U.S. officials may have had regarding our acquisition."
The company said that the political environment created "a level of uncertainty that presents an unacceptable risk to our ability to secure this transaction."
Meanwhile, influential investment-advisory group Institutional Shareholder Services on Monday endorsed Chevron's bid for Unocal. ISS estimated it would take six to nine months for CNOOC's bid to navigate through all the political and regulatory hurdles in the United States and China, with no guarantee that the deal would ever be completed. CNOOC's withdrawal frees the way for Chevron to clinch its $17.4 billion bid for Unocal.
Chevron, the second largest U.S. oil company behind Exxon Mobil, last week raised its cash-and-stock offer for Unocal to $63.01 a share, from $16.7 billion, or $60.51 a share.
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