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Unocal shareholders OK Chevron takeover Chevron reserves up by about 15 percent, with combined company production the equivalent of 2.8 million barrels of oil per day Gary Gentile Associated Press Business Writer
When Unocal Corp. Chief Executive Chuck Williamson first discussed a possible sale to Chinese oil and gas company CNOOC Ltd. last December, he and his CNOOC counterpart, Fu Chengyu, knew there would be political repercussions. What they didn’t count on was the firestorm that would eventually scuttle any deal between the two companies and clear the way for Chevron Corp. to buy Unocal in a stock and cash deal valued at approximately $18 billion.
“This touched a nerve,” Williamson said Aug. 10 after Unocal shareholders voted overwhelmingly to approve the Chevron takeover.
“It really became a platform in my mind for much more complex and greater China-United States issues than just CNOOC and Unocal. That we did not anticipate.”
Late on Aug. 10, Unocal ceased to exist as an independent company and its shares were delisted from the New York Stock Exchange. The new company will simply be known as Chevron Corp., with headquarters in San Ramon, Calif.
Williamson will remain with Chevron for a few months to help with the transition as thousands of Unocal employees consider job offers from their new employer.
Unocal announced that holders of 77.2 percent of eligible shares favored the Chevron buyout and 2.6 percent were opposed. Of the shares actually voted, 96.6 percent approved the deal. Chevron’s reserves up by about 15% The combined companies will produce the equivalent of 2.8 million barrels of oil per day and the acquisition will increase Chevron’s reserves by about 15 percent, Chevron said in a press release.
CNOOC dropped its all-cash bid of $67 per share earlier in August after U.S. politicians, noting that the company is 70 percent owned by China’s communist government, expressed concern that national security would be compromised. A flurry of legislation intended to derail the deal was introduced in both houses of Congress.
The controversy focused public attention on China’s growing appetite for foreign investments and the question of how U.S. corporations and lawmakers should respond. CNOOC offer nearly approved Despite the prospect of six months or more of uncertain regulatory haggling, Unocal’s board nearly approved the CNOOC offer until Chevron increased its bid.
CNOOC had been willing to raise its all-cash bid even further, but Unocal balked at the conditions, which included publicly endorsing the CNOOC offer and shouldering the $500 million breakup fee that would be owed to Chevron.
“We did go to them and ask them to raise their bid with the intent that they would raise their bid,” Williamson told shareholders Aug. 10. “We always treated CNOOC very fairly and equitably and quite seriously.”
Williamson acknowledged that the price of oil rose more rapidly since the Chevron deal was first reached in April than he had anticipated. But he said Unocal shareholders who opted to take Chevron stock will participate in the profits resulting from higher prices.
“That offer was open until the last day for anyone else who wanted to pay more in cash,” Williamson said. “You’ll never time any acquisition or divestiture perfectly in this industry.”
Chevron, the nation’s second-largest oil company, initially made a combination cash and stock offer of about $61 per share in April, sweetening the deal after CNOOC made its higher bid.
Chevron raised its buyout offer in July to a deal consisting of 60 percent stock and 40 percent cash, which was valued at roughly $63 per share. The value has risen in recent weeks along with Chevron’s stock price.
In a joint news release, the companies said an overwhelming majority of Unocal shareholders have elected to receive cash for their shares. Shareholders also had the option of receiving all stock or a combination of stock and cash.
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