State-owned China Offshore Oil Corp made headlines and history by launching a bold and contentious bid to buy California-based Unocal.
Unocal initially accepted a rival bid from US major Chevron, and the bidding war was accompanied by a rising political cacophony as the implications for bilateral economic and political ties were debated.
At press time, CNOOC was offering US$18.5bn cash (or US$67 per share) while Chevron had bid less, US$16.7bn in cash and shares (US$60.64 per share). Conservatives in Congress joined the fray, expressing fears that a deal could open the floodgates to a wholesale Chinese takeover of strategic US industries, a prospect apparently more worrisome to them than the Japanese buying Rockefeller Center and Impressionist paintings when Tokyo was on a roll in the late 1980s. Shareholders in Unocal are expected to vote on the bids August 10.
CNOOC's board decided in mid-July to give its chairman authority- under limited conditions-to up the bid (amount not specified) and to make concessions, including some divestiture and placing over US$2bn in an escrow account to compensate Unocal if the deal falls through.
The Chinese company's bid for a US oil company, and the explosive reaction, has eclipsed the fact that US companies are intensifying their efforts to buy or invest in Chinese businesses. "Congress has to wrap its head around the fact that it cannot stop China from growing," said economist Carl B. Weinberg, writing for High Frequency Economics in New York. "Therefore, it cannot stop China from crowding out US interests in the global energy markets."