NYT/AP: Shareholder Presses Unocal Board on Bid (over higher Chinese bid)

[DeepModem Mom]

Shareholder Presses Unocal Board on Bid
By THE ASSOCIATED PRESS
Published: July 24, 2005
Filed at 7:16 p.m. ET


LOS ANGELES (AP) -- A major shareholder of Unocal Corp. has urged the company's board to reconsider its endorsement of a takeover bid by Chevron Corp. over a higher offer by a Chinese state-owned oil company, saying the company may be breaking the law by not considering the higher bid.

In a July 20 letter to Unocal's board, P. Schoenfeld Asset Management LLC, which holds more than 1 million shares of Unocal, wrote that the oil company has a responsibility to its shareholders to lobby the federal government for approval of Chinese oil company CNOOC Ltd.'s bid.

''It is a violation of bedrock Delaware law for fiduciaries to enter into agreements that bar them from obtaining materially higher offers,'' according to a letter by the New York firm that was released Sunday. ''It is your duty to maximize value for stockholders.''...

***

Unocal's board last week announced it would recommend that company shareholders accept Chevron's offer after the San Ramon, Calif.-based company boosted its cash and stock offer to $17 billion. Analysts have said CNOOC, which offered $18.5 billion, will likely have to increase its offer and add a substantial financial guarantee if it wants to persuade Unocal shareholders to reject the Chevron bid in a vote scheduled for Aug. 10.

The proposal by CNOOC, which is 70 percent owned by the Chinese government, has met stiff opposition in Congress, where some lawmakers have complained that CNOOC's offer is part of a broader strategy by communist China to hoard energy supplies before they run out....


http://www.nytimes.com/aponline/business/AP-Unocal.html

[Greyhound]

1. They're probably right (Schoenfeld et al). That is a corporations only...

real duty.
Maximize shareholder value.
Won't it be ironic when the court forces the sale to our long time enemies. Maybe we (and I do mean we, remember all the MFN debates?) could claim national security issues. But wait, we blew out that possibility when we had the chance to make a few billions selling them chip technology. Or how about that we can no longer make our own weapons of destruction and depend on foreign suppliers to keep our technologically dependant military fighting.
Oh well, I'm sure it will all be OK, tra la la...

:banghead:

[TahitiNut]

2. Yep. They're not even bound by duty to obey laws EXCEPT ...

... when it cost/benefit requires they do. It's all about risk analysis: (the probability of being caught X the cost of being caught) + cost to evade detection. That's why they lobby for loopholes.

[madrchsod]

3. IF we had a real government

we would buy the company to protect our oil supply.....

[PeaceProgProsp]

4. Or we'd have a government that didn't' make enemies with the world so

that it wouldn't be a big deal if the majority shareholder of an international oil company weren't American.

Although a nationalized oil industry in the US has its merits, I'm not sure why, if we think the free market is such a wonderful thing, why we'd let Chevron get Unocal at a discount from its fair market value by shutting out the Chinese.

How about this compromise: let China buy it and THEN nationalize it and every other oil company at fair market value.