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Shareholder Presses Unocal Board to Reconsider CNOOC Bid

Unocal LogoA major shareholder of Unocal Corporation has urged the company's board to reconsider its endorsement of a takeover bid by Chevron over a higher offer by a Chinese state-owned oil company, saying the board may be breaking the law if it enters into a deal that forbids it from obtaining higher offers.

In a 20 July letter to Unocal's board, P. Schoenfeld Asset Management LLC, which holds more than 1 million shares of oil and gas producer Unocal, wrote that the oil company has a responsibility to its shareholders to lobby the federal government for approval of Chinese oil company CNOOC Ltd.'s bid.

"It is a violation of bedrock Delaware law for fiduciaries to enter into agreements that bar them from obtaining materially higher offers," according to a letter by the New York firm that was released Sunday. "It is your duty to maximize value for stockholders."

Unocal's board last week announced it would recommend that company shareholders accept Chevron's offer after the San Ramon, California-based company boosted its cash and stock offer to $17 billion. Analysts have said CNOOC, which offered $18.5 billion, will likely have to increase its offer and add a substantial financial guarantee if it wants to persuade Unocal shareholders to reject the Chevron bid in a vote scheduled for 10 August.

The proposal by CNOOC, which is 70% owned by the Chinese government, has met stiff opposition in Congress, where some lawmakers have complained that CNOOC's offer is part of a broader strategy by communist China to hoard energy supplies before they run out.

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Unocal Corporation
Chevron Corporation
China National Offshore Oil Corporation (CNOOC)

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Posted 25/07/05

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