CNOOC drops Unocal bid, citing US political opposition

02 August 2005 15:36  [Source: ICIS news]

HOUSTON (CNI)--China National Offshore Oil Corporation (CNOOC) on Tuesday dropped its offer for Unocal, citing an adverse political environment in the US.


Last month Unocal's board accepted an increased $17bn (Euro14bn) merger offer from Chevron, rejecting a counter offer from CNOOC.


Chevron increased its offer by $2/share to $63/share. CNOOC offered $18.5bn but its bid drew stiff opposition in the US Congress, where bills were introduced to block it.


CNOOC said in a statement: "We believe that the combination of CNOOC and Unocal would have created a strong and successful oil and gas company, focused on the fast growing Asian economy, to the benefit of our shareholders and the employees of both companies."


The Chinese company said it had filed with the Committee on Foreign Investments in the US (CFIUS) regarding its bid, and had committed to satisfy CFIUS findings.


The company said: "CNOOC has given active consideration to further improving the terms of its offer, and would have done so but for the political environment in the US. The unprecedented political opposition that followed the announcement of our proposed transaction, attempting to replace or amend the CFIUS process that has been successfully in operation for almost two decades, 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 US officials may have had regarding our acquisition. This political environment has made it very difficult for us to accurately assess our chance of success, creating a level of uncertainty that presents an unacceptable risk to our ability to secure this transaction."


CNOOC said: "We maintain a disciplined and focused approach to our evaluation of opportunities to grow shareholder value and will continue to work closely with companies and countries around the world."


Unocal officials were not immediately available for comment.


Unocal stockholders are scheduled to vote on the Chevron offer on 10 August.

By: Patrick Crow
+1 713 525 2653

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