Unocal wanted CNOOC to raise the bid

The board of directors of Unocal Corp., the U.S. oil and gas producer, admitted Monday it had been prepared to accept a takeover offer from China's CNOOC Ltd. if it had sufficiently raised its $67 (Ђ55) a share bid.

According to AP, the companies "substantially completed" a draft merger agreement by mid-July that would have displaced Chevron Corp.'s bid for Unocal, the oil company said in a proxy statement filed Monday with the Securities and Exchange Commission.

Unocal Chief Executive Charles Williamson told CNOOC Chief Executive Fu Chengyu on July 15 that a deal likely could be made if he raised the price.

"Mr. Williamson contacted Mr. Fu and again requested that CNOOC increase its price," Unocal said in the proxy, which detailed the mid-July back and forth negotiations between Unocal, CNOOC and California-based Chevron. "Mr. Williamson also observed to Mr. Fu that a sufficiently large increase in the proposed consideration could likely result in a conclusion of the process, and he urged Mr. Fu to make his best offer."

On July 17 Unocal's board told Williamson to inform Chevron it was inclined to shift its support to CNOOC unless Chevron sweetened its terms, reports Reuters.

By the time those statements were made, Unocal's board had already concluded that it would have to withdraw its recommendation of the lower Chevron bid if neither company raised its offer. The filing doesn't say how much Unocal hoped CNOOC would bid.

CNOOC refused to budge, unless Unocal paid the costs of terminating the Chevron deal and lobbied for the deal in Congress steps Unocal said it couldn't take.

In the end, Chevron raised its cash-and-stock offer to about $63 a share from around $60.50. On July 20, Unocal's board accepted Chevron's higher offer and recommended shareholders approve it.

The SEC filing on Monday was the revised proxy statement related to that vote, with the details of the higher Chevron offer, Reuters reports.

Unocal shareholders will vote on the Chevron bid on Aug. 10.