The Marketplace Report: Chevron's Bid For Unocal
ALEX CHADWICK, host:
Back now with DAY TO DAY. I'm Alex Chadwick.
The oil company Unocal is considering a new buyout bid. This is one of the big stories in business news these days. Chevron has now increased an earlier offer for the company to $17 billion. This the latest move in a takeover battle that's drawn the attention of industry analysts and the concerns of some political leaders. Joining us to talk about the fight for Unocal is "Marketplace's" Tess Vigeland.
Tess, what are the details of this latest offer? And remind us of the background here, OK?
TESS VIGELAND reporting:
Well, this latest offer, as you mentioned, is worth about $17 billion, $63 a share, and that's $2 a share more than the last Chevron bid several weeks ago. Chevron is also reportedly bringing more cash to the table in this offer, though it is still a cash and stock. And Unocal's board already jumped on the sweetened deal; it said yes. And that means that it has rejected what is a still-higher bid from the Chinese National Offshore Oil Company, CNOOC. It's offering $18 1/2 billion cash. And that, of course, has sparked quite a bit of political concern on Capitol Hill. CNOOC is 70 percent owned by the Chinese government.
CHADWICK: Well, we assume there's some politics in this. But Unocal, you say, already has said yes to Chevron's latest bid.
CHADWICK: So some of this has got to be about the money, too.
VIGELAND: Of course, definitely. Certainly, all these factors have to be at work here and the board will, or at least should, be trying to do right by Unocal's investors. Analyst Bernard Picchi says it may just be easier for Unocal to go with the lower offer from Chevron.
Mr. BERNARD PICCHI (Analyst): If there were only a three- or $4-a-share differential between the two bids, I probably, as an investor, might be inclined even to go with the lower bid given the certainty of its approval, given the fact that it's cleared all the regulatory hurdles, that it doesn't face the head wind of opposition from Congress the way that clearly the CNOOC bid does.
VIGELAND: And there has been lots of pressure coming from Capitol Hill for the administration to take a really hard look at any proposed Chinese takeover. Again, that may have played heavily in the Unocal board's decision to endorse this offer from Chevron, but the bidding war may not be over yet.
CHADWICK: Well, what's going to happen next?
VIGELAND: CNOOC could certainly decide to raise its offer. It's indicated that it might do so if Unocal publicly expressed interest. But then it also has to be looking at what's going on in Washington, and Unocal's shareholders are scheduled to vote on August 10th.
And by the way, as an aside, Alex, let me just mention that another Chinese company looking to buy an American company--Haier, looking to buy Maytag--dropped out of that particular battle. And Whirlpool had sweetened its offer on Monday; now the Chinese company Haier has dropped out.
And today on "Marketplace," we're looking at a bunch of companies that are going private.
CHADWICK: Thank you, Tess Vigeland of "Marketplace" from American Public Media.
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