At Unocal [2]'s final shareholder's meeting Aug. 10, an overwhelming majority approved the $17.5 billion merger with Chevron. Chief Executive Charles Williamson said Unocal considered a sale only after being approached months ago by China National Offshore Oil -- known as CNOOC -- which wanted to buy the California-based oil company. Unocal then solicited offers from other outfits, ultimately choosing Chevron on April 4.
CNOOC's efforts to buy the company for a higher price were cut short when Congress wrote a provision into the new energy bill that would require extensive federal hearings on the sale to a Chinese company. Citing the new law, CNOOC withdrew its $18.5 billion offer on Aug. 2.
Former Unocal engineer Emil Bereczky criticized the $112 million severance package awarded to Unocal's eight most senior managers. "Management is killing the company to get millions in benefits for themselves," he said. "It's a conflict of interest."
Patricia Hearst -- not the once-kidnapped heiress but a former member of the Hearst family by marriage -- disagreed, saying that although a sale of the company "brought her to tears," management had done the right thing. "Because we're staying in this country, I support the merger," she said.
Shareholder George Foley warned that the scuttling of CNOOC deal could hurt US relations with China. "This whole thing was handled so badly," he said. "The Chinese really got the shaft. They have long memories."
Founded as Union Oil Company of California in 1890, Unocal ultimately acquired large oil and gas reserves in Southeast Asian markets, including Indonesia, Thailand and Burma [3]. (Business Week [4], Aug. 11)
Unocal's key areas of operations in the Asia-Pacific [5]and Caspian [6]regions, and the Gulf of Mexico make a strong fit with Chevron's existing areas of operations.
The company has confirmed the continued employment of more than 5,000 Unocal employees. Chevron intends to make employment offers to many of the remaining 1,400 Unocal employees and to conclude the selection process by the end of September. (Oil & Gas Journal [7], Aug. 11)
NOTE: Chevron already merged with Texaco [8]in 2001, making this offspring of the old Standard Oil monolith bigger than ever, currently ranking at number 11 in the Fortune 500 [9]. Chevron also acquired industry major Gulf Oil in 1984. Two other Standard Oil offspring, Exxon and Mobil [10], merged in 1999, and ExxonMobil now stands at number 3 in the Fortune 500 (or number 1 [11] if ranked by profit rather than revenue). So now the legendary "Seven Sisters" (Exxon, Chevron, Mobil, Texaco, Gulf, BP and Shell) are only "four sisters" (ExxonMobil, ChevronTexaco, BP and Shell), and two of the four--both the US companies, Exxon and Chevron--are Standard Oil offspring. So we are one merger away from nearly the situation the US faced before the 1911 anti-trust case [12] that broke up the Rockefellers' Standard Oil monopoly. Maybe it's time for a new round of federal trust-busting, eh?
Ralph Nader in 2008?
See our last post on Unocal [13], and the global oil crisis [14].
