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July 24, 2005

Show Us The Money

Unocal urged to consider higher bid NEW YORK (Reuters) - A shareholder in oil and gas producer Unocal Corp. urged on Sunday the company's board to consider a higher takeover offer from China's CNOOC Ltd. than one it backed from Chevron Corp. .

Peter Schoenfeld, chief executive of P. Schoenfeld Asset Management which holds over 1 million Unocal shares, said the company would be liable to stockholders for any lost premium on the deal if it refused to seek a higher offer.

Schoenfeld is claiming damages would be "several billion dollars." I guess he hasn't read this NYT's piece yet. Chevron's dollars are a sure thing. Getting his mitts on Cnooc's could be problematic.
So that is the China question: Is it an opportunity or a threat? If nothing else, the Cnooc bid for Unocal has shown how unsettled American thinking is on China and how deep the anxieties run, both in matters of national security and trade.

It is easy to dismiss Washington as a hot-air factory, but the scope of the outcry in Congress is significant. Resolutions and legislative proposals, all critical of Cnooc's takeover bid, have piled up in the House and Senate, from Republicans and Democrats. A resolution presented last month by Representative Richard W. Pombo, a California Republican, declared that permitting the Chinese company to buy Unocal would "threaten to impair the national security of the United States." It passed, 398 to 15.

Senator Byron Dorgan, a North Dakota Democrat, has drafted three pieces of anti-Cnooc legislation that range from calling for a six-month Congressional inquiry into the bid to a bill that would prohibit the deal. Mr. Dorgan objects to the Chinese move on fair-trade grounds. The Chinese government, he says, would not allow an American company to buy a Chinese oil company. "So why on earth should they be able to buy an American oil company?" Mr. Dorgan said.

Well, why should they?

Posted by tree hugging sister at July 24, 2005 11:58 PM


Schoenfeld sounds like a stupid, greedy bastard.

Posted by: The Real JeffS at July 25, 2005 01:06 AM

Schoenfeld: "We demand that the Unocal board of directors adhere to its fiduciary duty to seek to obtain a higher offer for Unocal shareholders".

This fundamentally misunderstands what the board's fiduciary duty to shareholders actually is. Their job is to seek maximum VALUE, not necessarily maximum immediate profits. It's perfectly reasonable for a member of the board (and I would say justified) to think all the regulatory and legislative problems a CNOOC takeover would entail pose a real danger to the shareholders' value.

Anyone know where Unocal is incorporated? I wouldn't really see the Delaware Court of Chancery taking a suit by Schoenfeld seriously, but if it's somewhere else, well, different states' courts do behave in different ways.

Posted by: Dave J at July 25, 2005 10:05 AM

Wikipedia (http://en.wikipedia.org/wiki/Unocal) says Unocal was incorporated at Santa Paula, CA, Dave.

Posted by: The Real JeffS at July 25, 2005 10:26 AM

We really can't allow this to be sold to the Chinese.

Posted by: Mr. Bingley at July 25, 2005 10:38 AM

This Chinese bid is starting to look like Jason in a Hockey mask. Just when you think all the danger's over and you're sitting on your couch, petting a small, caterpillar like dog, BAM! In through the window comes some asshole with a chainsaw.

It's just like that.

Posted by: tree hugging sister at July 25, 2005 10:45 AM

Jeff, that it was founded in California and still has its HQ there doesn't necessarily mean that's still where it's incorporated: looking over its website, it seems to have reorganized multiple times, but I can't find where it's incorporated. The listed companies directory at the New York Stock Exchange doesn't say, either: http://www.nyse.com/about/listed/ucl.html

Posted by: Dave J at July 25, 2005 12:06 PM

Some quick Googling strongly suggests, though I'm not absolutely positive, that as I first suspected, Unocal is indeed incorporated in Delaware.

Posted by: Dave J at July 25, 2005 12:13 PM

I see, Dave, one must follow the bread crumbs with any corporation!

Posted by: The Real JeffS at July 26, 2005 01:24 AM