Rebirth of England

On Christmas Day last year, the chairman of CNOOC came to a restaurant in Los Angeles alone and had a secret meeting with Unocal. The discussion was about CNOOC's acquisition of Unocal.

Only 10 days after Fu Chengyu met with Unocal Chairman Williams, the well-informed British Financial Times took the lead in revealing the secret news of CNOOC's negotiation to purchase Unocal.

Now it seems that based on Barron's experience, this kind of secret meeting was still disclosed by the media at that time. I am afraid that it is very likely that Unocal deliberately released the news in order to introduce competitors to raise the price.

On February 27 this year, Unocal began to provide preliminary information to CNOOC and invited them to be one of the candidate companies for a friendly acquisition.

On the next day, February 28, when CNOOC launched the merger and acquisition project of Unocal, it began to hire world-renowned consultants in various fields to assist.

The investment banks are Goldman Sachs Group and JPMorgan Chase; the legal advisors are DPW, Herbert Smith; the tax advisor is Deloitte; the technical advisor is Mller Lents; the public relations and media advisor is Brunswick, PSI; the policy advisor is Akin Gum...

Then in March, CNOOC decided to propose a price range of $59 to $62 per share to Unocal.

This time's offer is an intention offer and is not binding. Its purpose is to show CNOOC's sincerity for this acquisition and to obtain a ticket to enter the ranks of Unocal acquirers, thereby opening the door to the due diligence stage.

Afterwards, Unocal's board of directors accepted CNOOC's non-binding offer and allowed CNOOC to conduct confirmatory due diligence.

Soon, a special team of thirteen Unocal executives, including Chairman Williams, arrived in Yanjing.

The purpose of their trip is to make on-site presentations on Unocal's core oil and gas assets and reserves that CNOOC is concerned about, and to answer various questions from the acquirer's leadership group.

At that time, there were three main reasons why Unocal's senior executives took the initiative to extend an olive branch to CNOOC and went to Yanjing for negotiations -

First, CNOOC controls the huge natural gas market, and if it acquires it, Unocal’s stock will increase in value;

Second, CNOOC has stated that Unocal’s senior management will basically remain after the acquisition. This is a reassurance for Unocal’s management:

Third, since most of CNOOC's shares are not fully tradable, all acquisitions require cash, which is very tempting for Unocal's shareholders.

After the due diligence, the CNOOC acquisition project team finally determined the valuation range of Unocal - US$51.9-67.7 per share.

Now that the matter has progressed to this point, it can be said that both parties have strong intentions and have almost confirmed the acquisition...

However, March 30 was the deadline for CNOOC to submit an accurate quotation to Unocal as agreed. However, due to the hesitation of CNOOC's foreign independent directors - all four foreign independent directors refused to express their stance on the merger plan. Some independent directors said that due to the rush and failure to have a deep understanding of the acquisition plan, they were worried that the company's management would pursue irrational mergers in pursuit of scale.

The board of directors meeting on this day to decide on the bid broke up unhappy and failed to pass their acquisition plan, thereby delaying CNOOC's acquisition plan.

Then on April 4, Chevron, the second largest oil company in the United States, announced that it would exchange 25% of its cash (US$6.5 billion) and 75% of its stock (1.03 Chevron shares for 1 Unocal share). ) acquires Unocal Corporation.

Based on Chevron's stock closing price of $59.31 on April 1, the purchase price is approximately $62.07 per share, and the total purchase price is approximately $16.4 billion.

Unocal management initially accepted the offer.

It is worth mentioning that on April 8, Shu Aiwen, one of CNOOC’s foreign independent directors, announced his resignation due to health reasons.

The reason why Barron did not join in the acquisition of Unocal earlier was because he saw that during the acquisition of CNOOC, Chevron, as the second largest oil company in the United States, was involved in All-round obstruction.

Therefore, he needs certain commitments from Goldman Sachs Group and the Vanguard Group behind it before launching the acquisition of Unocal. Otherwise, United Energy Group will also encounter some of the methods that CNOOC encountered...

After all, this is the home of Chevron, and I don’t know how many politicians have taken their “donations.”

Although Chevron was the first to make an offer for Unocal, and their board of directors initially accepted the offer and entered the acquisition process.

However, according to U.S. law, other companies still have the opportunity to bid for the Chevron-Unocal deal before the U.S. Stock Exchange approves it.

Therefore, both CNOOC and United Energy Group still have opportunities.

Now CNOOC has made another offer - US$67 per share (total price of US$18.5 billion), an all-cash acquisition.

According to the stock price at this time, it exceeds Chevron's quoted price by 9.4%.

Your Highness, CNOOC has already played its cards. If you still want to get involved in this acquisition, you need to act now. Otherwise, once the dust settles, Unocal will be acquired by Chevron.

Lloyd said to Barron.

In fact, now is the exciting time, isn't it? I think some people will use their usual tricks to stop CNOOC's intervention...

Barron seemed to be in no hurry and said to Lloyd calmly:

I'm looking forward to the wonderful performances you have here next... I said before that if United Energy Group joins this acquisition, it first needs to ensure that I will not be affected by off-market moves, you know, Mr. Blankfein , we are still engaged in local operations, trying to acquire the natural gas business of National Grid Corporation of England, and do not have much energy to deal with those politicians who are like flies outside of acquisition negotiations.

I think all this is negotiable. Your Highness the Duke, if you want to use United Energy Group to acquire Unocal, what kind of plan will you adopt?

After hearing Lloyd's question, Barron pondered for a moment and said:

Frankly speaking, CNOOC's bid is already very high. I am not prepared to offer a higher price, but the acquisition can be made using cash and stocks - although I would prefer to use an all-cash acquisition like CNOOC.

That's the thing. Unocal's shareholders clearly prefer CNOOC's all-cash acquisition plan to Chevron's cash-and-stock acquisition plan.

But when it comes to United Energy Group, the Vanguard Group and their allies, which hold a lot of shares in Unocal, hope that the proportion of shares in their acquisition plan will be higher.

After all, although Chevron is the second largest oil company in the United States, it also means that their current scale has already entered a stable period. Unocal shareholders want the latter more than cash.

But United Energy Group is different. This company has more potential, so they are willing to exchange Unocal's shares for United Energy Group's shares.

With all due respect, Your Highness the Duke, if United Energy Group bids lower than CNOOC, then I am afraid it will not have any advantage in this acquisition.

Would you like to make a bet? I think we just need to bid higher than Chevron. As for CNOOC, I don't think they have any chance...

Barron took a sip of the coffee at Goldman Sachs and said relaxedly:

Unless they make a desperate move to significantly raise the purchase price, I'm afraid the possibility of this happening is lower than those lawmakers supported by Chevron attacking CNOOC without using the excuse of 'national security.'

Before leaving Lloyd's office, Barron said:

We'll be able to see the trend of this outcome tomorrow.