The move of the China National Offshore Oil Company Ltd to bid for US based-Unocal is pure business and benefits shareholders, said a spokesman for CNOOC Ltd yesterday.
The spokesman, who refused to give his name, said that as a company listed both in Hong Kong and New York, any decision made by CNOOC is for the benefits of shareholders, including the one to bid for Unocal.
CNOOC announced early on June 23 that it has proposed a merger with Unocal, a major US oil company, offering US$67 in cash per Unocal share, totaling US$18.5 billion.
If successful, it would be the biggest-ever overseas acquisition for a Chinese company.
Established in Hong Kong in August 1999, CNOOC Ltd was listed on the New York and Hong Kong stock exchanges in February, 2001. The company was admitted as a constituent stock of the Hang Seng Index in July 2001.
In a letter sent to the chairman of Unocal on June 23, CNOOC Chairman and Chief Executive Officer Fu Chengyu said that "this friendly, all-cash proposal is a superior offer for Unocal shareholders," and "I am confident that the merger will increase shareholder value."
However, there is concern as much as applause.
Through Chinese media, experts have expressed their worry that the deal may be blocked for political reasons.
"There are two factors affecting the results of the negotiation, " said Long Guoqiang, an expert from the Development and Research Center under the State Council.
"The first one is the market, which is favorable for CNOOC because of the high price it has offered. But the policy may become the biggest obstacle in CNOOC's bid for the deal."
A letter written and co-signed by two Texas Republicans to US President George W Bush said CNOOC's bid represents a "clear threat" to the energy and national security of the US.
Over the past week, Fu Chengyu has been engaged in various efforts to ease US worries such as giving interviews to Western financial media.
"I want you to know that we encourage that review and welcome the opportunity to participate," Fu said in a letter to the US Congress on Monday.
The deal is made in line with international practice, said the CNOOC spokesman.
CNOOC is advised by Goldman Sachs and JP Morgan.
For the bid, CNOOC will get bridge loans provided by Goldman Sachs and JP Morgan totaling US$3 billion, which are expected to be replaced by permanent debt financing in the form of bonds at or shortly after completion.