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Ted Butler: The gold and silver secret
By Francesco Guerrera
and Joe Levy
Financial Times, London
Tuesday, August 2, 2005
http://us.ft.com/ftsuperpage/superpage.php?
news_id=fto080220051442155071&referrer_id=yahoofinance
HONG KONG -- CNOOC on Tuesday dropped its $18.5 billion for Unocal,
ending the most ambitious takeover attempt by a Chinese company and
leaving Chevron to buy the US energy group for about $17.6bn in cash
and shares.
The end of CNOOC's eight-month quest casts doubt over the willingness
and ability of Chinese companies to grow through foreign acquisitions
in the face of potential political opposition and stiff competition
from domestic rivals, especially in the US.
"This is certainly going to make Chinese companies take a longer look
before they make the investment of time and money in trying to make a
bid like this in the US," said Andy Rothman, China strategist with
the brokerage CLSA in Shanghai.
"I don't think that's a positive thing for the US economy." CNOOC's
withdrawal means Unocal shareholders are virtually certain to vote
for Chevron's offer of about $64 per share on August 10.
The state-controlled Chinese group blamed the political backlash in
Congress for the collapse of its bid, which failed to win the
approval of Unocal's board because it was regarded as riskier than
Chevron's lower offer. However, investors and analysts said CNOOC and
its advisers made strategic mistakes. "They probably should have put
in a higher offer and put some conditions on disposal of the North
American assets," said one analyst with a US brokerage.
CNOOC's attack on US politicians could pave the way for retaliatory
measures by the Chinese authorities against US companies seeking
investments in China. It could also increase tensions before next
month's Washington visit by Hu Jintao, China's president.
CNOOC said it would have raised its cash offer of $67 per Unocal
share "but for the political environment in the US", where
legislators saw the proposal as a covert attempt by the Chinese
government to buy strategic energy assets and threatened to pass laws
to block it.
"The unprecedented political opposition . . . was regrettable and
unjustified," it said.
CNOOC, whose interest for Unocal was first reported in the Financial
Times in January, said the political uncertainty presented
an "unacceptable risk."
CNOOC and its advisers, Goldman Sachs and JPMorgan, declined to
comment on Tuesday.
However, people close to the situation said CNOOC had presented a
package of concessions including a pledge to sell the US assets if
required by regulators. Chevron said it was looking forward to
concluding the deal and was "proceeding rapidly with the plan for
integration."
Unocal shares were up 0.1 per cent at $64.34 in early trading in New
York yesterday.
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http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
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Ted Butler silver commentary archive:
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----------------------------------------------------
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----------------------------------------------------
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