Unocal Eyes Chevron Bid

Oil Co.'s Board Rejects Higher Offer From State-Owned China Firm

(AP) 
After CNOOC made its bid for Unocal, members of Congress demanded a review of the offer by the Committee on Foreign Investment in the United States. The group, led by Treasury Secretary John Snow, was created to monitor foreign investment activity in the United States with an eye on protecting national security.

Members of Congress have complained that CNOOC's bid for Unocal is part of a broader strategy by communist China to hoard energy supplies before they run out. Another concern is that the United States might unintentionally hand over technology or assets that have military value.

The House registered its discomfort last month by approving a resolution that asks the president for an immediate and thorough review if Unocal accepts CNOOC's offer.

Nine senators sent a letter Tuesday to President Bush urging a full investigation into CNOOC's proposed acquisition of Unocal.

Chevron Corp., based in San Ramon, Calif., explores for, refines and transports crude oil and gas. Unocal's operations are in exploration and production of crude oil and natural gas, with no refineries or gasoline stations. Together the two companies account for more than 11 percent of U.S. crude oil production.

Under the agreement between Unocal and Chevron reached last April, Chevron has the right to force a vote of Unocal shareholders. That vote is scheduled for the Aug. 10 meeting.

Chevron's revised offer is structured as 40 percent cash and 60 percent stock. Unocal stockholders may elect to receive for each share of Unocal stock either $69 in cash, 1.03 shares of Chevron stock or a combination of $27.60 in cash and 0.618 of a share of Chevron common stock. Chevron will issue approximately 168 million shares of stock and pay approximately $7.5 billion in cash, according to the joint statement.

Since CNOOC made its all-cash bid, Chevron has emphasized that its offer was superior because it had already cleared regulatory reviews. The CNOOC bid, by contrast, could take six months or more to be reviewed by U.S. and overseas agencies.

CNOOC first expressed its interest in acquiring Unocal last December, before Chevron approached.