U.S. lawmakers try to slow oil bid for UNOCAL
International Herald Tribune
Bloomberg News
WEDNESDAY, JULY 27, 2005
WASHINGTON U.S. lawmakers have agreed to order a review that may delay a decision by the government on whether to allow a $18.5 billion bid for Unocal by Cnooc, the Chinese oil giant, for nearly five months.
House and Senate negotiators from both parties agreed late Monday to add a provision to an energy policy bill requiring the Department of Energy to prepare a study within 120 days on the effect that China's energy demands would have on the United States. The Committee on Foreign Investment in the United States would then have to wait for 21 days before completing its review of Cnooc's bid.
"I think we ought to slow this down and take a hard look at what's happening and why it's happening," said Senator Byron Dorgan, Democrat of North Dakota. "You mention here pure delay. That is precisely the purpose, delay."
Unocal's board voted July 19 to pass over Cnooc's cash offer in favor of a stock-and-cash bid from Chevron, the second-largest U.S. oil company, worth $17.3 billion at the close of trading Monday. Unocal shareholders are scheduled to vote Aug. 10 on the agreement.
Cnooc's chief financial officer, Yang Hua, declined to comment on the lawmakers' decision. "It's not convenient for us to make any comment for now," he said by telephone.
Don Campbell, a Chevron spokesman, said, "We respect the fact that Congress has expressed its concerns for a transaction like the one proposed by Cnooc. We look forward to securing the Unocal shareholders' vote and concluding our transaction with Unocal on Aug. 10."
The Committee on Foreign Investment, which is chaired by the Treasury Department and includes 11 other agencies, would review any proposal for Cnooc to take over Unocal once the acquisition has shareholder approval.
The Republican-sponsored legislation must be approved by the full House and Senate before it can be signed into law by President George W. Bush. The bill is a priority for the president, who has said he wants to have a bill on his desk before Congress adjourns for its August recess.
The Cnooc chief executive, Fu Chengyu, refused to increase his offer of $67 a share for Unocal unless he is released from an obligation to pay a $500 million breakup fee to rival bidder Chevron, according to a Unocal public filing Monday.
Fu told Unocal's chief executive, Charles Williamson, on July 16 that he would only raise the bid by $2 to $69 a share, as authorized by his board, if the fee were dropped, Unocal said in the filing to the U.S. Securities and Exchange Commission.
Cnooc "failed to offer Unocal's stockholders sufficient compensation" to justify the risks of failing to win regulatory approvals in the United States and Hong Kong, Unocal said.
Chevron plans to close the acquisition the same day, should Unocal shareholders approve its proposal on Aug. 10. The transaction would make Chevron the world's fourth-largest publicly traded oil company, behind Exxon Mobil, BP and Royal Dutch Shell.
The agreement requires Unocal to pay $500 million to Chevron if Unocal abandons the deal in favor of an offer from another suitor. Cnooc's June 23 offer for Unocal included a promise to pay the fee on Unocal's behalf.
Bloomberg News
WEDNESDAY, JULY 27, 2005
WASHINGTON U.S. lawmakers have agreed to order a review that may delay a decision by the government on whether to allow a $18.5 billion bid for Unocal by Cnooc, the Chinese oil giant, for nearly five months.
House and Senate negotiators from both parties agreed late Monday to add a provision to an energy policy bill requiring the Department of Energy to prepare a study within 120 days on the effect that China's energy demands would have on the United States. The Committee on Foreign Investment in the United States would then have to wait for 21 days before completing its review of Cnooc's bid.
"I think we ought to slow this down and take a hard look at what's happening and why it's happening," said Senator Byron Dorgan, Democrat of North Dakota. "You mention here pure delay. That is precisely the purpose, delay."
Unocal's board voted July 19 to pass over Cnooc's cash offer in favor of a stock-and-cash bid from Chevron, the second-largest U.S. oil company, worth $17.3 billion at the close of trading Monday. Unocal shareholders are scheduled to vote Aug. 10 on the agreement.
Cnooc's chief financial officer, Yang Hua, declined to comment on the lawmakers' decision. "It's not convenient for us to make any comment for now," he said by telephone.
Don Campbell, a Chevron spokesman, said, "We respect the fact that Congress has expressed its concerns for a transaction like the one proposed by Cnooc. We look forward to securing the Unocal shareholders' vote and concluding our transaction with Unocal on Aug. 10."
The Committee on Foreign Investment, which is chaired by the Treasury Department and includes 11 other agencies, would review any proposal for Cnooc to take over Unocal once the acquisition has shareholder approval.
The Republican-sponsored legislation must be approved by the full House and Senate before it can be signed into law by President George W. Bush. The bill is a priority for the president, who has said he wants to have a bill on his desk before Congress adjourns for its August recess.
The Cnooc chief executive, Fu Chengyu, refused to increase his offer of $67 a share for Unocal unless he is released from an obligation to pay a $500 million breakup fee to rival bidder Chevron, according to a Unocal public filing Monday.
Fu told Unocal's chief executive, Charles Williamson, on July 16 that he would only raise the bid by $2 to $69 a share, as authorized by his board, if the fee were dropped, Unocal said in the filing to the U.S. Securities and Exchange Commission.
Cnooc "failed to offer Unocal's stockholders sufficient compensation" to justify the risks of failing to win regulatory approvals in the United States and Hong Kong, Unocal said.
Chevron plans to close the acquisition the same day, should Unocal shareholders approve its proposal on Aug. 10. The transaction would make Chevron the world's fourth-largest publicly traded oil company, behind Exxon Mobil, BP and Royal Dutch Shell.
The agreement requires Unocal to pay $500 million to Chevron if Unocal abandons the deal in favor of an offer from another suitor. Cnooc's June 23 offer for Unocal included a promise to pay the fee on Unocal's behalf.
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