THE board of CNOOC, the state-owned Chinese oil and gas company, late last night voted to break up an agreed deal between Unocal and Chevron, its American rivals, with an estimated $19 billion (£10.4 billion) cash bid for Unocal.
If CNOOC presses ahead with a bid, it will be the biggest foreign investment ever made by a Chinese company. The decision was made after CNOOC’s board directors met for several hours in Beijing. No details were given on the price or structure of a deal. A potentially hostile bid by a state-owned Chinese company for an American oil company looks likely to provoke the US’s energy lobby into raising strong objections. It could also prompt Chevron to sweeten its $16.6 billion offer for Unocal.
Unocal’s oil and gas fields, which stretch from Azerbaijan to Indonesia, are of clear strategic importance for the Chinese company. According to analysts CNOOC will be able to squeeze costs out of Unocal, an option that is limited under the agreed deal with Chevron.
CNOOC is preparing documentation on the planned bid, which could be filed with the Hong Kong stock exchange as early as today.
The bid would be worth more than $19 billion, or at least $65 per Unocal share, in addition to taking on $1.6 billion of debt.
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The development came as Chevron moved to complete a deal to acquire Unocal that it agreed in April. The deal could be closed by August.
George Kirkland, Chevron’s global head of exploration and production, said early this week: “We’re doing everything we can to move this quickly.”
In April Chevron beat CNOOC and other potential suitors in the race to buy Unocal. Chevron would also take on the $1.6 billion in debt. The deal carries a $500 million break-up fee, meaning that a new suitor would have to pay that amount to Chevron.
Sam Bodman, the US Energy Secretary, refused to speculate how the Bush administration would react to a bid by CNOOC for Unocal, except to say it would trigger a “complex” government review.