Chinese company makes bid for American oil company

| Thursday, June 23, 2005

You won’t find these numbers in any fortune cookie.

CNOOC Ltd., an oil company controlled by the Chinese government, made an offer of $18 billion to buy Unocal Corp., a U.S.-based oil company.

The offer marks the first major takeover attempt that puts a Chinese company in direct competition with an American one. But CNOOC’s offer is a long way from anything resembling a done deal.

Chevron Corp. had already made plans to buy Unocal earlier this year in a deal worth $16.2 billion. Unocal agreed to accept that offer on April 4.

Bloomberg news service reported that Chevron said it’s pact to buy the company remains very much intact, and that Unocal’s board of directors is still recommending the Chevron deal.

There are other complications with CNOOC’s offer as well. Bloomberg said that even if Unocal accepted the offer, the Chinese company would still have to get approval from the U.S. government, which could undermine the bid.

Experts say that Chevron has the upper hand because it is a larger company, it is based in the U.S., and it has more capital available than CNOOC.

To finance the deal, CNOOC said it would have to borrow $16 million from its parent company and Chinese banks.

Comments