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To China, will This Set Well?
#1
Unocal backs sweetened $17 bln Chevron bid . Will this cause a barrage of insults from the PRC? And do you think that the Federal government was in any way involved?
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All men are frauds. The only difference between them is that some admit it. I myself deny it.
H. L. Mencken
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#2
Quote:And do you think that the Federal government was in any way involved?

Not directly. Government would be involved in an approval process but it starts only after a deal has been made.

However: the very existance of a lengthy and uncertain approval process devalues the Chinese bid; to be competative, Chinese need to offer a couple of billions above Chevron.

As for the barrage: right now, PRC has nothing to complain about: Unocal decided that going with Chevron was a better idea, that's all...
Government is necessary because people left unchecked will do evil.

The government is composed of people left unchecked


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#3
I guess we will see. Wink1 soon!
___________________________________________________________________________________________________
All men are frauds. The only difference between them is that some admit it. I myself deny it.
H. L. Mencken
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#4
mv Wrote:Not directly. Government would be involved in an approval process but it starts only after a deal has been made.

While the government doesn't directly say yea or nea, this branch of the Treasury Dept will review and give an opinion.
http://www.treas.gov/offices/internation...on-florio/
They rarely recommend against, but when they do, its devastating to the foreign entity.
"Most people just want tomorrow to look pretty much like today." - Terry Pratchett
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#5
This probably relates only tangentially to this thread. But still it might be interpreted as a sign of confidence in their own ability to swim.
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#6
Seabird,

Stratfor did interpret the events as government intereference: basically, the congressional mood (and Congress has nothing to do with the approval) was so apparent that Unocal chose not to bother with the Chinese...

Ag,

It is *somewhat* related in a different sense: it is a bargaining move in a way. This is *not* yuan floating, even if it looks like one; it is really just a 2% adjustment in the exchange rate: this is the Chinese offer, which comes with a hint that no more adjustments will occur before the end of the year.

On the other hand, we have a 27% offer (threat) from Schumer and a hint from Bush that 10% might be ok.

Schumer was put on hold because of the expectations of a Chinese adjustment; now, that we know it was a small change, it might be logical to unleash Schumer (September?).
Government is necessary because people left unchecked will do evil.

The government is composed of people left unchecked


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#7
mv Wrote:Seabird,

Stratfor did interpret the events as government intereference: basically, the congressional mood (and Congress has nothing to do with the approval) was so apparent that Unocal chose not to bother with the Chinese...

Well its the explicit job of CFIUS to review any sort of major attempt at foreign investment into the country. The last time they truly recommended against though was back in 1991 (I believe). Usually they will just recommend further review and perhaps extensive Congressional review. Often times that's enough to discourage any further attempt by the foreign investor to enter the market. They determine that the time and energy involved in making their case through so much red tape and bureaucracy isn't worth the opportunity anymore.

But CFIUS is considered very non-partisan. What perhaps Stratfor didn't say (or maybe didn't know) is that CFIUS can send signals to Congress about what its finding which may or may not affect their "mood" as you put.

I don't know if they had any direct impact this time, but its possible.

Finally, as with any sort of major story such as this, there is more to it. The scuttlebutt within the industry (my own company looked at a merger with Unical about 3 years ago) was that Chinese investment was a poor plan with regard to the long term health of the operation. The Chinese (like the Russians) are adept at finding resources, but they lack the technological infrastructure to exploit the findings and then move the product.

They are very wary of direct investment from foreign entities as well. The typical partnership means resource sharing. An American company might help find NG in a field in Siberia, but that company wants an arrangement whereby they get to share what's produced. In particular, the Russians, the Mexicans, and to some extent the Chinese, are loathe to follow this plan. They only want turn key service and technology for a flat rate. So a lot of these deals end up at an impasse.

There was probably a lot more to this than simple Congressional grumbling. It seemed outwardly at least that it just wasn't very good business. But again, that's just rumor and conjecture within the industry.
"Most people just want tomorrow to look pretty much like today." - Terry Pratchett
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