EL SEGUNDO, Calif. -- Unocal Corp. endorsed a sweetened $17 billion takeover offer from Chevron Corp., preferring it over a higher bid from China's CNOOC Ltd., reported Reuters.
San Ramon, Calif.-based Chevron raised its stock and cash bid to $63 per share, up from roughly $60 a share, turning up the heat in an international battle for assets amid soaring world demand for crude and record oil prices.
The increase was meant to combat CNOOC's efforts to wrest Unocal away with a bid of $67 a share, or $18.5 billion. "Our increased [image-nocss] offer has been driven by competitive circumstances," said Chevron Chairman and CEO David O'Reilly in a statement.
El Segundo, Calif.-based Unocal's board, which previously favored the Chevron offer partly because of concern U.S. regulators would reject the CNOOC transaction, recommended shareholders accept the sweetened Chevron offer.
CNOOC said it remained "comfortable" with its existing $18.5 billion bid and believed its all-cash offer had a "distinct advantage." Industry sources said the Chinese firm would hold a meeting in Beijing later on Wednesday.
Chevron upped the cash component of its offer to 40% from 25%, paying a total of $7.5 billion and issuing 168 million shares. Unocal shareholders will get $27.60 in cash and 0.618 of a Chevron share for each Unocal share. Chevron said the higher offer remained accretive to its cash flow and earnings per share in 2006.
"The Unocal board of directors recommends that Unocal stockholders vote in favor of adopting the Chevron merger agreement, as amended, at the special meeting of stockholders scheduled for Aug. 10, 2005," a joint Unocal-Chevron statement read.
CNOOC's overture had sparked concern among U.S. politicians that a sale of Unocal to a Beijing-controlled company would harm U.S. national energy security. The Chinese government owns 70% of CNOOC.
The U.S. House Energy & Commerce Committee will hold a hearing on CNOOC's bid for Unocal on Friday, on the heels of a Congressional hearing last week where the Chinese offer came under attack.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.