Not everyone in Asia thinks that CNOOC’s attempt to buy Unocal — which has been rejected by Unocal’s board of directors — is a good idea. In fact, some investors in CNOOC are so concerned they are voting with their feet:
HONG KONG (Dow Jones)–CNOOC Ltd.’s (0883.HK) largest non-government shareholder, William Blair & Co., has sold its stake worth US$41 million in the Chinese oil company because it doesn’t support its offer for Unocal Corp. (UCL), reports The Standard in its Wednesday edition, quoting Bloomberg.
“We’re not in favor of the bid,” said David Merjan, who helps manage US$11 billion of funds at William Blair in Chicago.
The offer for Unocal marks a “sudden change in strategy” and suggests CNOOC “no longer believes that it can achieve the growth rates they thought possible organically, so they think they need to acquire more companies,” said Merjan in the report.
In addition, the Chinese government is “exerting more pressure” on CNOOC’s management and board, he said.
Merjan said he expects CNOOC will need to raise more than US$20 billion to win Unocal, the paper reports.
“In the interest of maximizing shareholder value we don’t think that’s a good thing,” said Merjan.
William Blair held a 0.57% stake in CNOOC as of March 31, equivalent to 235.7 million shares.
This is the market at work. No one is nearly as concerned about Chevron’s finances because the company is flush with cash and has bought back a lot of shares in the last few years. But a lot of people are very concerned about the debt CNOOC would acquire in the deal. They are responding accordingly, selling their shares and sending a signal even overbearing, nationalistic government managers will eventually have to hear.
The private company, Chevron, has the edge over the state-owned company, CNOOC. Golly, whodaeverthunkit?
8:51 am on July 20, 2005
