Chinese energy company CNOOC has ended its ambitious plan to takeover US oil company Unocal, blaming political interference. The move has, however, met with apparent investor approval as shares in the Asian company increased by 5% following the news.
CNOOC’s decision to close its interest in Unocal comes despite it tabling the highest offer. However, strong opposition in the corridors of power in the US and the failure to gain official support from Unocal’s board have ultimately proven to be more important than the cash on the table.
With CNOOC’s withdrawal Unocal’s original suitor ChevronTexaco now has a clear run to complete the buyout, albeit at a higher price than it initially offered. From Unocal’s position, the decision by its board to stick with its endorsement of its fellow US company has been vindicated, despite the fact that Chevron’s bid of $17.6 billion was short of CNOOC’s $18.5 billion offer.
Meanwhile, despite missing out on its strong desire to gain a foothold in the US market, CNOOC has seen its share price increase to a new high. CNOOC’s Hong Kong-listed shares jumped more than 5% to a record high of HK$5.8 in first trading after the news broke.