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CNOOC abandons $18.5bn bid for
Unocal
By Francesco Guerrera and Joe Leahy in Hong Kong The Financial Times Published: August 2 2005 06:33 | Last updated: August 2 2005 15:41 CNOOCCNOOC on Tuesday abandoned its $18.5bn bid for Unocal, ending the most ambitious takeover attempt by a Chinese company and leaving Chevron to buy the US energy group for about $17.3bn in cash and shares. The end of CNOOC's eight-month quest for Unocal raises questions over the ability of Chinese companies to grow through cross-border takeovers in the face of potential political opposition and stiff competition from foreign rivals. "This is certainly going to make Chinese companies take a longer look before they make the investment of time and money in trying to make a bid like this in the US," said Andy Rothman, China strategist with the brokerage CLSA in Shanghai. "I don't think that's a positive thing for the US economy given that there's no national security issue here." The state-controlled Chinese group on Tuesday blamed the political backlash in the US as the main reason for the collapse of its bid, which failed to win the approval of Unocal's board because it was regarded as riskier than Chevron's lower offer. "The unprecedented political opposition ... was regrettable and unjustified," CNOOC said in a statement. "We deeply appreciate the support we have had from shareholders ... but feel it is no longer in their fundamental best interests that we pursue our bid in these circumstances." CNOOC's withdrawal follows weeks of staunch political opposition in Washington to the Chinese state-owned oil company's bid for Unocal. Last week, Congress approved an amendment to an energy bill delaying a government review of a CNOOC acquisition by almost two months. The bid encountered even more trouble on Monday as Institutional Shareholder Services, an influential proxy voting firm whose recommendations can sway US takeover battles, backed the existing deal with Chevron. ISS said it was supporting Chevron because of the significant premium associated with the $17.5bn offer, as well as the regulatory risks associated with CNOOC's bid. Investors will vote on Chevron's cash-and-shares offer on August 10. That date left CNOOC with little time to persuade Unocal's board and shareholders to back its bid. Analysts and investors believe CNOOC would have had to raise its offer above $70 per share to win support from Unocal's board members. However such a move had become increasingly unlikely after several days of discussions within the Chinese company, according to people familiar with the matter. Meanwhile, Wall Street investors had already bet against the chances of a higher offer from CNOOC. Unocal shares closed down at $64.37 in New York trading on Monday, approaching the value of Chevron's offer of about $64 per share in cash and stock. CNOOC's bid was worth $67 per share in cash. CNOOC's shares rose to a new record in Hong Kong trading on Tuesday, gaining 2.8 per cent to HK$5.50. Complete archives at http://www.sitbot.net/ Please let us stay on topic and be civil. OM YAHOO! GROUPS LINKS
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