This story is very significant and important as to relating to the "Big Picture" in the investment markets.
This will be interesting to see how it plays out....can you just imagine the changes ahead for us here in the US if the Chinese currency appreciates "freely" someday to the depreciating US dollar??
Something for all to ponder.....
China's CNOOC offers 18.5 billion dollars for Unocal Thu Jun 23,10:27 AM ET
BEIJING (AFP) - State-run energy firm China National Offshore Oil Corporation (CNOOC) announced a bid to buy US oil major Unocal for 18.5 billion dollars cash, trumping a rival offer by Chevron Corp.
CNOOC said it was proposing a friendly merger, offering 67 dollars a share for the California-based company in a deal that underlines China's drive to secure energy resources overseas to sustain its rapid economic growth.
It tops the cash-and-shares offer Chevron hammered out with Unocal by 1.5 billion dollars using Unocal's June 21 closing share price of 64.85 dollars.
Chevron, the number-two US oil company, received US regulatory approval on June 10 for its bid. Unocal said it would evaluate the CNOOC proposal but reiterated that its earlier recommendation to shareholders to accept the Chevron offer remained in place.
"This friendly, all-cash proposal is a superior offer for Unocal shareholders," said CNOOC chairman and chief executive Fu Chengyu.
"The deal is fully financed, subject to customary closing conditions, and priced in line with market values for comparable businesses."
If successful, it would represent the biggest overseas acquisition in a spate of buying by Chinese mainland companies, dwarfing Lenovo Group's 1.25 billion dollar takeover of IBM's global personal computer business.
However, the bid could face Congressional opposition in the United States on issues ranging from China's trade surplus to US oil security.
Two US Congressman wrote to President George W. Bush ahead of the offer opposing any Chinese takeover of US oil interests as a threat to security.
Fu dismissed the concerns, saying the deal was a strictly commercial transaction.
"This company's business will not have any negative impact on the security interests of the United States," he said in a conference call.
In a statement, CNOOC said the merged group would benefit from the companies' complementary strengths and unlike the Chevron bid, its offer would involve no job losses.
"CNOOC will seek to retain substantially all Unocal employees, including those in the US," it said.
"This is in contrast to the existing Chevron proposal where Chevron has already announced plans to extract hundreds of millions of dollars of cost savings from the merger annually, including from employee layoffs."
The US giant has more than 6,000 employees, with most of its activities in Asia and North America. It has no refining or marketing operations.
CNOOC, China's third-largest oil group, plans to finance the deal with its own cash reserves of more than three billion dollars and bridging loans from Goldman Sachs, JPMorgan and the Industrial and Commercial Bank of China.
It will also use a long-term, subordinated loan provided by its majority shareholder, China National Offshore Oil Corp.
The announcement, widely expected by investors, fits into a larger Chinese strategy of securing access to energy sources overseas to ensure stable supplies for its enterprises and households.
Power outages have become common in China, forcing factories to close, as demand for energy outstrips supplies.
Some analysts have accused CNOOC of acting more out of national interest than shareholder concern but Fu denied this, saying "shareholder value was always the main driver."
"Strategically this a significant deal in terms of synergy for CNOOC if they can get Unocal's Asia-Pacific assets," said Belle Liang, oil analyst at Core Pacific Yamaichi in Hong Kong.
He Jun, senior analyst with Anbound, a government and corporate economic consultant group, said if successful, it would certainly help ease China's power supply crisis.
"Its not a cheap deal, it will raise the companys asset and liability ratio (significantly) but there is something that should count politically, which is to ensure the countrys power supply," he said.
About 70 percent of Unocal's current proved oil and gas reserves are in Asia and the Caspian region, which are strategic for CNOOC.
In the statement, CNOOC said it expects the proposed merger to more than double its oil and gas production and increase its reserves by nearly 80 percent to about four billion barrels of oil equivalent.
The merged group would also have an improved oil and gas balance, with total reserves of approximately 53 percent oil and 47 percent natural gas, it said.
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