Executives from Chevron Corp. and Unocal Corp. will begin visiting Unocal's largest shareholders today to win their backing for Chevron's takeover bid despite lingering hopes that a higher offer might come from China's CNOOC Ltd.
El Segundo-based Unocal has agreed to be purchased by Chevron in a stock and cash deal worth $17.3 billion Wednesday, or $63.65 a share, and the company's shareholders will vote on that proposal Aug. 10.
"We will be visiting major stockholders starting tomorrow to encourage their support of the merger with Chevron," Unocal spokesman Barry Lane said Wednesday. He said the meetings would take place over the next week.
More than half of Unocal shares must be voted in favor of the offer from San Ramon, Calif.-based Chevron for the purchase to become final. The proposed transaction has already been approved by regulators.
Institutional Shareholder Services Inc., a Rockville, Md., company that provides recommendations to large stockholders on mergers and other matters, said it would make a recommendation on the Chevron deal after it met with company officials.
"A lot of the large institutional holders are watching this pretty closely," ISS special counsel Patrick McGurn said. "It's a matter of price, process and politics -- they are the three Ps right now."
Meanwhile, investors and others are still hoping for a counteroffer from CNOOC, whose cash offer of $18.5 billion, or $67 a share, was turned down last week by Unocal's board. The company said a buyout by CNOOC was riskier because it would take longer than Chevron's deal and would require additional scrutiny from regulators.
CNOOC's parent company is China National Offshore Oil Corp., an oil firm that is 71% owned by the Chinese government. In recent weeks, the prospect of a Unocal-CNOOC deal has triggered vigorous opposition from members of Congress worried that it might have national security and economic repercussions for the United States.
In a filing earlier this week, Unocal officials said they were prepared to back the CNOOC offer, but believed that a higher price was warranted given the added risk. CNOOC had hinted at raising its bid to $69 a share, but Unocal said that offer would have come with unacceptable conditions.
When Chevron raised its offer, Unocal reaffirmed its support for that deal.
Some analysts believe that CNOOC will take a final stab at winning Unocal, but will wait to make its offer until after Congress goes into recess at the end of this week. In addition, some believe the Chinese firm will try to smooth over the government's concerns by offering to sell some or all of Unocal's U.S. properties.
Reuters was used in compiling this report.