EL SEGUNDO, Calif. -- A week and a half after the Federal Trade Commission (FTC) cleared the way for Chevron Corp. to purchase Unocal Corp., Chevron is standing behind the merger agreement in response to a counteroffer made by a third party. State-owned China National Offshore Oil Co. (CNOOC) made a late bid for Unocal on Wednesday, offering $2 more per share than Chevron.
The Unocal board said that while its recommendation to accept the Chevron bid remains in effect, it will review the CNOOC bid, a bid some have termed hostile. Unocalintends to evaluate [image-nocss] the CNOOC proposal in a manner consistent with the board's fiduciary duties and its obligations under the Chevron agreement, stated a press release. There can be no assurance that the proposal would result in a definitive agreement with CNOOC.
Chevron's bid offers Unocal stockholders $65 per share in cash and/or 1.03 shares of Chevron common stocktotal cost, $16.6 billion. CNOOC upped the ante late Wednesday by offering to acquire all outstanding shares of Unocal for $67 per share in cash, raising the purchase price to $18.5 billion.
In its own press release, Chevron stated that it stands behind its April 4, 2005, merger agreement with Unocal, which has been approved by the boards of both companies. The Chevron/Unocal agreement combines compelling value, regulatory certainty and accelerated timing, providing a superior transaction for Unocal stockholders, the company stated. Chevron's combination of cash and stock allows Unocal stockholders the opportunity to realize a premium on their investment in Unocal, while continuing their participation in the oil and gas sector through a leading global energy company. Unocal's assets are a superb fit with Chevron's operations and capabilities, creating long-term investment value for stockholders.
San Ramon, Calif.-based Chevron also noted that its offer is likely to pass federal regulatory procedures relatively quickly, while the CNOOC proposal must undergo an extensive regulatory process in the United States and elsewhere. Chevron and Unocal are substantially finished with the regulatory process, having already received clearance to proceed from the Federal Trade Commission.
On June 10, the FTC cleared the way for Chevron to acquire Unocal by voting 4 to 0 to settle a two-year-old complaint against Unocal alleging anticompetitive practices. The settlement ended a legal fight between Unocal and the FTC over the energy company's rights to a patent for reformulated gasoline. If the merger process continues as originally outlined, Unocal stockholders could vote on the Chevron proposal in early August.
If El Segundo, Calif.-based Unocal, the ninth largest U.S. oil company, should change its tune, a purchase by CNOOC would be the biggest yet in a multibillion-dollar wave of foreign acquisitions by Chinese companies trying to secure a place as global competitors, according to an Associated Press report.
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