Zhang Fengming/Shanghai Daily news

A chinese oil company has offered US$18.5 billion to buy a US energy supplier in what could turn out to be a mainland firm's biggest overseas acquisition and China's first corporate takeover battle in America.
The bid, involving CNOOC Ltd, China's third-biggest oil company, and US-based Unocal Corp, is designed to secure oil and gas supplies to fuel China's growing appetite for energy.
CNOOC Ltd - the listed arm of China National Offshore Oil Corp - made Unocal stockholders a cash offer of US$67 a share, outgunning a stock-and-cash proposal made in April by America's Chevron Corp, the Beijing-based firm reported on its Website yesterday.
"The board passed the purchase plan, and we will endeavor to make it happen," CNOOC Chairman Fu Chengyu said during a telephone conference yesterday morning, calling the company's bid a "friendly" offer.
Zhou Shouwei, CNOOC's president, told the conference participants that a successful deal would increase CNOOC's output by giving it reserves spanning 12 countries and also create a more balanced portfolio between oil and natural gas, giving greater protection against price volatility.
The acquisition would more than double CNOOC's oil and gas output and increase its reserves by nearly 80 percent to the equivalent of about 4 billion barrels of oil, the Chinese firm noted.
And it would give CNOOC an output mix of 53 percent oil and 47 percent natural gas, compared with the present ratio of 65-35.
Industry analysts said the move makes sense because it helps satisfy China's eagerness to secure a stable supply of energy to fuel an economy that grew 9.5 percent in the first quarter.
"The deal may pay off in the long run given China's growing appetite for oil and gas," said Li Zhipeng, a Xiangcai Securities Co analyst. "The gas reserves are a key point in the purchase."
CNOOC is now building liquefied natural gas projects around the country, and Unocal's vast gas reserves in Indonesia and Thailand would help secure a stable supply, Li noted.
But before any of these extra reserves can be guaranteed, CNOOC must convince Unocal's shareowners to accept the deal. On April 4, Unocal agreed to be acquired by Chevron for around US$16.4 billion.
Unocal said it intends to evaluate the CNOOC proposal but added that the Chevron bid "remains in effect."
US Treasury Secretary John Snow said yesterday that if CNOOC's bid for Unocal Corp succeeds both parties would need to submit the agreement to US government review for national security considerations.
Arguing its case, CNOOC said its bid would benefit the United States because the Chinese firm would not cut Unocal's American work force.
CNOOC also said it is willing to continue marketing Unocal's products in the United States.
To raise the cash for the deal, the Chinese firm said it would use US$3 billion of its own funds and borrow US$16 billion from its parent and financial institutions including the Industrial and Commercial Bank of China, Goldman Sachs Group and JP Morgan Chase and Co.