Will Chevron bid win Unocal’s approval?

Chevron Corp.'s $17.3 billion bid for Unocal Corp. is likely to win approval from a majority of shareholders next week amid doubt that a higher, all-cash offer from China's Cnooc Ltd. can overcome opposition by U.S. lawmakers.

Chevron's cash-and-stock plan to buy El Segundo, California- based Unocal was backed Monday by Institutional Shareholder Services, the biggest adviser to fund managers on merger votes. The group said Cnooc's offer is not enough to offset the risk that U.S. politicians could scuttle a deal.

“That recommendation is probably a pretty good sign of which way the vote will go,'' Christopher Edmonds, managing director at Pritchard Capital Partners, was quoted as saying by Bloomberg. “For some people this involves more than just price.''

Investors are scheduled to vote Aug. 10 on Chevron's offer, which valued Unocal at $63.71 a share as of Monday. Cnooc's bid of $67 a share or $18.5 billion “is highly uncertain'' and may no longer be “on the table,'' Chris Young, director of mergers and acquisition research at the ISS advisory firm in Rockville, Maryland, said in Monday's report.

Chevron Vice Chairman Peter J. Robertson said the endorsement "underscores our belief that a combination of these two companies makes strategic sense and that our merger terms offer Unocal shareholders a compelling value that could be theirs within a matter of seven business days."

On Monday, two more members of Congress criticized Cnooc's bid, Washington Post informs.

Rep. John D. Dingell of Michigan, ranking Democrat on the House Energy and Commerce Committee, attacked what he called below-market financing for Cnooc provided by the Chinese government.

"If China can finance [the Unocal] acquisition on such favorable terms, there is no reason to believe it could not, would not, or has not already subsidized acquisitions in other sectors to acquire other companies in key industries and unfairly compete against American firms and workers," Dingell wrote in a letter to Commerce Secretary Carlos M. Gutierrez.

Cnooc, China's third-largest oil company, made its cash offer for Unocal on June 23, topping Chevron by about $2 billion.