Chevron raised its bid for Unocal to $63.01 per share, compared with CNOOC’s bid worth $65.50. Unocal directors approved the Chevron bid, as Chevron’s bid is favored by the U.S. government and faces less regulatory harassment. Chevron has been lobbying intensely to raise the expense and political risk of CNOOC’s bid. It employed Wayne Berman, a top Bush fundraiser, and Drew Maloney, a former aide to professed free trader and House Majority Leader Tom DeLay. On the Democratic side, Chevron employed ex-US Trade Representative Mickey Kantor, who pushed for NAFTA and engineered creation of the WTO under Clinton.
Chevron’s offer for Unocal only returns its cost of capital assuming a price for crude oil of about $42, an aggressive target for deals in this sector. When Chevron first announced its proposed acquisition, its stock plummeted 15% as investors weighed the likely returns dilution represented by the deal. Major western investors have sold CNOOC shares, fearing that CNOOC will pay too much for Unocal. Ironically, the Sinophobes may be saving the Chinese alot of money.