“US politicians beating the protectionist drum should be hanging their heads in shame,” said Fiona Maharg-Bravo on Breakingviews.com, as Chinese oil explorer CNOOC pulled its $18.5bn bid for Unocal in the face of political opposition in the US. This leaves the way clear for rival Chevron to conclude a merger deal with Unocal.
So what went wrong for CNOOC? According to the Chinese group, months of potential delay – caused by Congress demanding a four-month study of Chinese energy policy before allowing a CNOOC bid – had created an “unacceptable risk” to its ability to close the deal.
The withdrawal is also a shame for Unocal shareholders, said Maharg-Bravo, because CNOOC’s $67-a-share cash bid was better than rival Chevron’s cash and shares offer, worth closer to $64. “With American companies vying to get a piece of the action, this little episode will probably come back to haunt them.”
But “if there is one silver lining,” said the FT, the experience has given China’s state-owned oil groups some valuable lessons in how best to go about securing energy supplies for the country in the future. The use of loans from CNOOC’s state-owned parent company only increased suspicion in the US, and analysts argue that the deal would not have helped China’s energy security in any case – most of Unocal’s Asian gas resources are already committed to supplying domestic markets, and the same would most likely have applied to Unocal in the US.
And it’s not just America that didn’t like the deal. Hong Kong investors weren’t keen on the move: the company’s Hong Kong-traded shares have risen 32% since the start of the year, compared to a 77% jump for rival PetroChina. After the group announced its withdrawal, shares rose to a record high in Hong Kong of HK$5.50