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CNOOC likely to drop bid for Unocal - sources
Updated: 2005-08-02 20:15

Chinese oil company CNOOC Ltd. is likely to announce that it's dropping its $18.5 billion offer for Unocal Corp. due to stiff U.S. political opposition, ending a 6-week takeover battle with Chevron Corp., people close to the plan said on Tuesday, the Reuters reported.

CNOOC likely to drop bid for Unocal - sources
China National Offshore Oil Corporation's (CNOOC) oil rigs is seen in China's Liaodong Bay of the Bohai sea February 3, 2005. [newsphoto]
The announcement by the Chinese oil company is expected within the next 24 hours, said one source. The chance that CNOOC will raise its offer for the U.S. producer above $67 a share is very slim, two sources said.

CNOOC executives and a spokesman declined to comment.

CNOOC's bid is higher than Chevron's $17.3 billion stock and cash offer, but Unocal's board backs Chevron, partly because a deal with CNOOC could get stuck in a long regulatory review process or be rejected by the U.S. government, the Reuter report said.

CNOOC's offer has drawn ferocious opposition from U.S. politicians, who say a sale of the California-based oil company with premium assets in Asia to CNOOC would harm U.S. energy security.

CNOOC Chairman Fu Chengyu, who was the driving force behind the bid, will make the final decision. Fu's political advisors have warned of the high political hurdles the transaction faces, but his financial advisors believe the deal is on if CNOOC raises its bid to $69 a share or more, the source said, according to the Reuters.
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