Wednesday, July 20, 2005
Chevron gets Unocal, Chinese get the cold shoulder of nationalism
Heh ... SHOCKING!
- California-based oil giant Unocal has rebuffed an $18.5 billion takeover offer from China's state-owned CNOOC with the provisional approval of an "improved" $17.1-billion-dollar acquisition offer from US-based Chevron.
Unocal, the ninth-largest US oil company, and Chevron jointly announced the proposed merger, which will be submitted August 10 to a vote by Unocal shareholders.
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The CNOOC bid had set off a politically-charged controversy in the US with some lawmakers and a number of private-sector groups raising concerns about a major US firm being acquired, in effect, by the Chinese government.
The US has a mechanism to investigate international efforts to purchase American companies and can block those that as seen as a threat to national security.
Earlier this week, the Bush Administration told the Washington File that it would have been "premature to hold a formal review" of a Chinese oil company's bid for the California-based oil company Unocal.
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According to media reports, CNOOC's Chief Executive Fu Chengyu had permission from the company's board to raise the bid to $19 billion, but it's know unclear whether CNOOC will up the ante.
Last week he offered to set aside $2.5 billion to cover Unocal against any shareholder lawsuits should a sale to CNOOC fail and depress Unocal's stock price.
CNOOC is one of three state-owned oil companies created by the Chinese government to acquire offshore oil reserves.
Established in 1982 as a joint venture partner with non-Chinese companies exploring such resources, CNOOC is 70%-owned by the Chinese government.
CNOOC's parent company, which is entirely owned by the Chinese government, had provided CNOOC with $7 billion toward the Unocal purchase.
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In 1995, CFIUS approved a takeover of Magnequench Inc., an Indianapolis, Indiana-headquartered company that supplies sophisticated magnets used in a variety of precision-guided munitions, by Beijing San Huan New Material High-Tech Inc., the China National Non-Ferrous Metals Import & Export Corp., and an investment group led by the Sextant Group Inc.
In 2003, the company's Chinese owners shut down Magnequench's production plant in Anderson, Indiana, and consolidated its production of magnetic powders at a facility in Tianjin, China.
Shortly afterwards, the company opened a magnet production facility in Juarez, Mexico.
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