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The Honolulu Advertiser
Posted on: Wednesday, July 20, 2005

Unocal backs Chevron proposal

By Laura Wides
Associated Press


Unocal Inc.: www.unocal.com CNOOC Ltd.: www.cnoocltd.com Chevron Corp.: www.chevron.com

LOS ANGELES — Unocal's board of directors yesterday recommended that its shareholders accept a last-minute, $17 billion merger bid from Chevron, rejecting a higher offer from China's third-largest oil company.

Chevron boosted its offer by $2 per share shortly before the Unocal board met last night, raising its bid to $63 per share, or more than $17 billion. The company originally bid about $16.6 billion in April.

"Our increased offer has been driven by competitive circumstances, but even at this higher price it remains a compelling transaction for Chevron stockholders," Chevron Chairman and CEO David J. O'Reilly said in a statement late yesterday.

Hours later, Unocal's board of directors recommended the company's stockholders vote in favor of adopting the amended merger at their Aug. 10 meeting, according to a joint statement from Chevron and El Segundo, Calif.-based Unocal.

CNOOC Ltd., a Hong Kong subsidiary of state-owned China National Offshore Oil Corp., said the company wasn't ready to abandon its $18.2 billion bid for Unocal, the ninth biggest U.S. oil company.

"The situation with us is that we have what we consider a clearly superior full-cash offer on the table, and it remains there," said CNOOC spokesman Ray Bashford in Hong Kong. "We're willing to continue negotiations."

American politicians have warned that CNOOC's effort could pose risks to U.S. national security and called for a full review by the Bush administration. The Chinese company's officials have welcomed a security review and denied that CNOOC was acting on behalf of China's government, which is in the midst of a multibillion-dollar campaign to secure foreign oil and gas supplies to power its booming economy.

China is the world's third-biggest oil importer behind Japan and the United States.

Chevron, 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 handle more than 11 percent of U.S. crude oil production.

Associated Press writer Gary Gentile contributed to this report.