US clears way for Chevron offer

NEW YORK - The US Government has given its final clearance to Chevron's offer to acquire Unocal, leaving China's Cnooc just six weeks to convince Unocal's board its own bid for the California oil and gas producer is superior.

Chevron and Unocal set an August 10 vote on their US$16.3 billion ($23.6 billion), cash-and-stock deal after the US Securities and Exchange Commission approved the proposed transaction.

That deadline put pressure on Cnooc and its US$18.5 billion, all-cash bid to acquire Unocal, which has sparked concerns from US politicians about national security and triggered heated rhetoric among the companies and the Chinese Government. CNOOC said it was confident that its offer was superior and that it had a chance to succeed.

US discontent over a US$160 billion trade deficit with China and jitters about China's growing military power has manifested itself as a backlash against the offer from politicians, who say it could threaten national security and US access to adequate energy supplies.

Many investors have said that the Cnooc offer is more attractive financially, but that the Chevron bid offers more certainty of being completed in a timely fashion.

"This is Chevron's best strategy. They have to try and push this thing through as fast as they can and hope Cnooc can't make any progress on the regulatory front," said Jason Putman, an analyst at Victory Capital Management.

Executives of Cnooc, majority-owned by the Chinese Government, and Unocal representatives planned to meet this week in New York to discuss a proposed deal. "We remain confident in the superiority of our offer and its chances of succeeding," Cnooc said yesterday.

Unocal said it continued to back Chevron's takeover offer even as it met Cnooc to discuss the rival bid. Unocal said it would disclose the board's stance on the Cnooc bid before shareholders vote on the Chevron deal in August.

"Because the Cnooc proposal is relatively new and does not yet reflect a binding merger agreement, we will need to engage with Cnooc over the next few weeks concerning a number of issues in order to understand if it will be possible to reach a satisfactory agreement," Unocal chairman and chief executive Chuck Williamson said in a letter to employees.

Chevron can require Unocal to hold a shareholder vote on its deal even in the face of a competing takeover bid. If shareholders approve the Chevron deal, Unocal said it expected the merger to close "almost immediately or within a few days, making the Cnooc offer moot."

Unocal said it would press ahead with integration plans with Chevron and the companies aim to announce some management positions for the combined company within the next few days.

From the start Cnooc has said it would welcome a review of its proposal by a government committee that examines bids by foreign companies for US corporations in cases where there are national security concerns.

- REUTERS