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China's CNOOC defends bid for Unocal
China's CNOOC Ltd. said on Saturday its request to the U.S. government to review its plan to merge with oil and gas producer Unocal Corp. was voluntary and aimed at clearing up doubts about the deal.
"It's a voluntary notice from CNOOC Ltd. We hope the review will be put onto formal proceedings of CFIUS as soon as possible as we are sure that the transaction is pure commercial," Xinhua news agency quoted a CNOOC spokesman as saying. CNOOC's bid for Unocal, whose headquarters in El Segundo, California, has become a complicating factor in the diplomatic jostling between China and the United States over currency and trade issues. It also comes at a sensitive time when oil is trading near record highs, and both countries are intent on securing energy resources. CFIUS, an interagency committee, considers proposed acquisitions of U.S. corporations by foreigners where national security might be a concern. "This filing gives CNOOC the opportunity to comply with all U.S. rules and regulations in an open and transparent manner, and to fully discuss our proposal," Xinhua quoted Yang Hua, CNOOC's chief financial officer, as saying. "We welcome this opportunity and believe that once all the facts are known and the commercial purpose and terms of the transaction are fully understood, many initial misimpressions will be corrected, and many doubts and questions will be favorably resolved," Yang said. He did not elaborate. The U.S. House of Representatives voted overwhelmingly on Thursday to add an amendment to an appropriations bill that would bar the Treasury Department from spending any money to recommend approval of the CNOOC bid for Unocal. If signed into law, the measure would not take effect until Oct. 1. The House also passed a non-binding resolution calling on President Bush to request an immediate review of the deal. U.S. Representative Joe Barton, chairman of the House Energy and Commerce Committee and co-sponsor of the resolution, called for a hearing on the CNOOC bid. CNOOC made the request for the U.S. government review before the two House votes. CFIUS will not begin its work until it has received what it calls a complete notification. If the panel accepts the application for review, it has 30 days to decide whether to launch a full investigation. Given that the CNOOC offer is more attractive financially, many investors have said the only real hurdle is political opposition that could slow down the acquisition. Chevron's offer already has all the necessary regulatory approvals. Unocal shareholders are set to vote Aug. 10 on the offer from Chevron. Until
then, Chevron says, CNOOC and Unocal cannot sign a deal unless Chevron is paid a
$500 million break-up fee.
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