US FTC quizzes Chevron-Unocal on $16b deal: Report

The US Federal Trade Commission has asked Chevron and Unocal for more information on their proposed $16bn merger, leaving China National Offshore Oil Company to hope it may have extra time to file a rival bid, the Financial Times reported Friday.

Plans by senior management of China's third largest oil company to revive a planned bid for Houston-based Unocal have been delayed by opposition from CNOOC's non-executive directors, who are waiting for independent advice on the proposal.

Chevron said in a regulatory filing it was working with the US antitrust watchdog, which made the request for more data last week, "with the intent of bringing the FTC review to a prompt conclusion".

CNOOC's senior management are interested in Unocal's Asian assets, particularly those in Thailand, Bangladesh and Indonesia.

But a previous plan by the Hong Kong-listed, Chinese state-controlled company to bid for Unocal was opposed by non-executive directors shortly before Chevron tabled its successful $16bn cash-and-share bid last month.

The non-executive directors have retained Rothschild, the investment bank, Charles River, a business consultancy; and Skadden, Arps, Slate, Meagher & Flom, the US M&A law firm, to independently evaluate the Unocal proposal.

The move by the non-executive directors to retain their own advisers on such a deal is considered highly unusual as CNOOC management had hired Goldman Sachs and JPMorgan to provide advice on the plan.

Industry observers note, however, that it could take two to three months for the independent advisers to complete a proper evaluation of the CNOOC proposal.

This process would be made more difficult by the fact that Unocal, having agreed to Chevron's bid, would most likely be unwilling to open its books to advisers from CNOOC.

At a board meeting in Hong Kong this week, the company discussed a possible bid but agreed to wait until mid-June before making a further decision on whether to act. However, if the Chevron and Unocal merger proposal faces antitrust concerns, CNOOC might have breathing space to put together another bid.

Chevron's regulatory filing gave no details of the reasons for the request for additional information from the FTC or how long it was expected to take for the transaction to receive regulatory approval. CNOOC and its advisers were unavailable for comment. (*)