On Christmas Day last year, the chairman of CNOOC came alone to a restaurant in Los Angeles and had a secret meeting with Unocal. The topic of discussion was CNOOC's acquisition of Unocal.
Just 10 days after Fu Chengyu met with Unocal's chairman Williams, the well-informed British Financial Times was the first to disclose the "secret" of CNOOC's acquisition of Unocal.
Now it seems that, based on Barron's experience, this secret meeting could have been disclosed by the media at the time. I'm afraid it was 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, inviting them to be one of the candidate companies for a "friendly acquisition."
On the next day, February 28, when CNOOC launched the acquisition of Unocal, it began to hire world-renowned consultants in various fields to assist in the battle.
The investment banks are Goldman Sachs and JPMorgan Chase; the legal advisors are DPW and Herbert Smith; the tax advisor is Deloitte; the technical advisor is Müller Lents; the public relations and media advisors are Brunswick and PSI; the policy advisor is Akin Gum...
Then in March, CNOOC decided to offer Unocal a price range of $59 to $62 per share.
This offer is an indicative offer and is not binding. Its purpose is to demonstrate CNOOC's sincerity in this acquisition and to gain an entry ticket into the ranks of Unocal acquirers, thereby opening the door to the due diligence stage.
Unocal's board of directors then accepted CNOOC's non-binding offer, allowing CNOOC to conduct "confirmatory" due diligence.
Soon, a special team consisting of 13 Unicom executives, including Chairman Williams, arrived in Yanjing.
The purpose of their visit was to make on-site presentations on issues such as Unocal's core oil and gas assets and reserves that CNOOC was concerned about, and to answer various questions from the acquirer's leadership team.
There were three main reasons why Unocal's top management took the initiative to extend an olive branch to CNOOC and went to Yanjing for negotiations:
First, CNOOC controls a huge natural gas market, and if it acquires Unocal, Unocal's stock will appreciate.
Second, CNOOC has stated that Unocal's senior management will basically stay after the acquisition, which is a reassurance for Unocal's management:
Third, since most of CNOOC's shares cannot be fully circulated, the acquisition must be made in cash, which is very tempting for Unocal's shareholders.
After completing due diligence, CNOOC's acquisition project team finally determined Unocal's valuation range - US$51.9-67.7 per share.
At this point, it can be said that both parties have strong intentions and have almost confirmed the acquisition...
However, on March 30, the deadline for CNOOC to submit an accurate offer to Unocal was reached. However, due to the hesitation of CNOOC's foreign independent directors, all four foreign independent directors refused to express their views on the acquisition plan. Some independent directors said that due to the rush of time and the lack of a deep understanding of the acquisition plan, they were worried that the company's management would blindly pursue scale and make irrational mergers.
The board meeting that day to decide on the offer ended in a bad mood and failed to pass their acquisition plan, thus delaying CNOOC's acquisition plan.
Then on April 4, Chevron, the second largest oil company in the United States, made a sudden move and announced that it would acquire Unocal Corporation for 25% in cash (US$6.5 billion) and 75% in stock (1.03 shares of Chevron for 1 share of Unocal).
Based on Chevron's closing stock price of $59.31 on April 1, the acquisition price is approximately $62.07 per share, and the total acquisition price is approximately $16.4 billion.
Unocal management has preliminarily 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 the acquisition of Unocal earlier was because he saw that during CNOOC's acquisition process, Chevron, as the second largest oil company in the United States, carried out all-round obstruction.
Therefore, he needs to get some promises from Goldman Sachs and the Vanguard Group behind it before launching the acquisition of Unocal. Otherwise, the United Energy Group will also encounter some of the methods encountered by CNOOC...
After all, this is Chevron's home turf, and I wonder how many politicians have received their "donations".
Although Chevron was the first to make an offer to Unocal, and their board of directors initially accepted the offer and entered into the acquisition process.
However, according to US law, other companies still have the opportunity to bid for the deal before the American 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 US$18.5 billion), an all-cash acquisition.
At the current stock price, it exceeded Chevron's offer 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 this to Barron.
"In fact, now is the exciting moment, 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 am looking forward to your wonderful performance next... I have said before that if United Energy Group joins this acquisition, it must first ensure that I will not be affected by any tricks. You know, Mr. Blankfein, we are still fighting on the home front, trying to acquire the natural gas business of National Grid of the United Kingdom. We do not have much energy to deal with those fly-like politicians outside of the acquisition negotiations."
"I think all of this is negotiable. Your Highness, if you want to use United Energy Group to acquire Unocal, what plan would you adopt?"
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 I can use cash and stock to acquire the company - although I would prefer to use all-cash acquisition like CNOOC."
Here's the thing: Unocal shareholders clearly prefer CNOOC's all-cash offer to Chevron's cash-and-stock offer.
But when it comes to United Energy Group, Vanguard Group and its allies, which hold a large number of Unocal shares, want a higher proportion of shares in their acquisition plan.
After all, although Chevron is the second largest oil company in the United States, it also means that their current scale has long entered a stable period. Compared with cash, Unocal's shareholders want the latter more.
But United Energy Group is different. This company has greater potential, so they are willing to exchange Unocal shares for United Energy Group shares.
"Excuse me, Your Highness, if United Energy Group's bid is lower than CNOOC's, then it will probably not have any advantage in this acquisition."
"How about making 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 Goldman Sachs' coffee and said casually:
"Unless they go all out and significantly raise the acquisition price, the possibility of this happening is probably lower than if those congressmen supported by Chevron did not use the excuse of 'national security' to attack CNOOC."
Before leaving Lloyd's office, Barron said:
"We will be able to see the trend of this result tomorrow."