Thursday, June 23, 2005

America For Sale

I am all for an open market and free trade. I believe that multinational corporations, while having some serious flaws, do play an important role in making individual nations more interdependent and thus, leads to political stability through economic means. But, I have serious problems with a state owned Chinese oil company from purchasing one of ours. Yesterday, the China National Offshore Oil Corporation ( CNOOC), offered $18.5 billion to purchase Unocal Oil Corporation. This tops a prior bid by Chevron by $1.6 billion.

While world markets must be open to foreign investment, our energy sector is our biggest Achilles heal when it comes to our national security. Not only would this deal further deepen our trade deficit, but would also increase our dependence on China, who is next in line to challenge the U.S. in world hegemony.

Chinese Oil Giant in Takeover Bid for U.S. Corporation

Published: June 23, 2005
SHANGHAI, Thursday, June 23 - One of China's largest state-controlled oil companies made a $18.5 billion unsolicited bid Thursday for Unocal, signaling the first big takeover battle by a Chinese company for an American corporation.

The bold bid, by the China National Offshore Oil Corporation ( CNOOC), may be a watershed in Chinese corporate behavior, and it demonstrates the increasing influence on Asia of Wall Street's bare-knuckled takeover tactics.

The offer is also the latest symbol of China's growing economic power and of the soaring ambitions of its corporate giants, particularly when it comes to the energy resources it needs desperately to continue feeding its rapid growth.

CNOOC's bid, which comes two months after Unocal agreed to be sold to Chevron, the American energy giant, for $16.4 billion, is expected to incite a potentially costly bidding war over the California-based Unocal, a large independent oil company. CNOOC said its offer represents a premium of about $1.5 billion over the value of Unocal's deal with Chevron after a $500 million breakup fee.

Moreover, the effort is likely to provoke a fierce debate in Washington about the nation's trade policies with China and the role of the two governments in the growing trend of deal making between companies in the countries.

This week, a consortium of investors led by the Haier Group, one of China's biggest companies, moved to acquire the Maytag Corporation, the American appliance maker, for about $1.3 billion, surpassing a bid from a group of American investors.

Last month, Lenovo, China's largest computer maker, completed its $1.75 billion deal for I.B.M.'s personal computer business, creating the world's third-largest computer maker after Dell and Hewlett-Packard.

(Full Story)

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