Tuesday, August 02, 2005
LexisNexis(TM) Academic - Document
LexisNexis(TM) Academic - DocumentFinancial Times (London, England)
August 3, 2005 Wednesday
London Edition 1
SECTION: CNOCC WITHDRAWAL; Pg. 22
LENGTH: 539 words
HEADLINE: 'Congressional angst' scuppers Chinese bid DEFEAT BY BACKLASH:
BYLINE: By STEPHANIE KIRCHGAESSNER
DATELINE: WASHINGTON
BODY:
The intense political opposition in Washington that ultimately scuppered CNOOC's attempted takeover of Unocal, the California oil company, was written on the wall days before the bid by the Chinese-backed company was even announced.
Six days before CNOOC revealed its unsolicited offer, Richard Pombo, a California Republican with close ties to US oil giant and rival bidder Chevron, said in a letter to President George W. Bush he was concerned any run for the company by the Chinese group represented a threat to national security.
Within weeks, what first appeared to be opposition from China hawks and Chevron loyalists grew into a chorus of resistance.
Washington attorneys familiar with the deal say the toppling of the CNOOC bid was not just a result or Chevron's lobbying prowess or Mr Pombo's campaign against the deal, which ultimately culminated in the passage of legislation that could have delayed the regulatory review of a CNOOC/Unocal merger.
They say CNOOC's biggest problem in Washington was that its attempt collided with US lawmakers' growing frustration with the US relationship with China on issues ranging from currency manipulation to trade reciprocity and intellectual property rights.
"They walked right into the two by four of Congressional angst about China and they were competing against an American company that has a highly sophisticated lobbying capability. Those two things were a very uphill climb," says Todd Malan, executive director of the Organization for International Investment, an association of foreign- owned US companies.
William Reinsch, president of the National Foreign Trade Council, says the deal was probably doomed from the start.
"We are in a time and place where every single one of these deals is going to go through extra scrutiny, because the deals give fodder to the view that China is the enemy, and we shouldn't be giving them anything because we are moving into an adversarial relationship with them," he says.
The political backlash was, some experts say, spurred by CNOOC's own missteps.
One Washington attorney who has followed the bid said CNOOC's first mistake was not pouncing on the opportunity to take over Unocal in April, when it first mulled a takeover. The delay allowed Chevron to join in.
Ultimately, Washington lawmakers who did not support the CNOOC bid did not have to look far to find points to attack. By arranging favourable financing from the Chinese government to support their bid, CNOOC gave Capitol Hill ammunition to accuse the Chinese company of being controlled by the state, according to the person who followed the deal.
"A lot of members of Congress are reluctant to weigh in on national security issues, but they saw the unfairness of the favourable terms. They were put in a way that was easy for Congress to understand," the person said.
The company's management also made tactical errors.
The Bush administration had maintained its distance during the early stages but the company's decision to request that the committee on foreign investments in the US, the panel that reviews foreign takeovers of US companies on national security grounds, begin its probe before CNOOC had sealed an agreement with Unocal forced the White House to become involved.
LOAD-DATE: August 2, 2005
August 3, 2005 Wednesday
London Edition 1
SECTION: CNOCC WITHDRAWAL; Pg. 22
LENGTH: 539 words
HEADLINE: 'Congressional angst' scuppers Chinese bid DEFEAT BY BACKLASH:
BYLINE: By STEPHANIE KIRCHGAESSNER
DATELINE: WASHINGTON
BODY:
The intense political opposition in Washington that ultimately scuppered CNOOC's attempted takeover of Unocal, the California oil company, was written on the wall days before the bid by the Chinese-backed company was even announced.
Six days before CNOOC revealed its unsolicited offer, Richard Pombo, a California Republican with close ties to US oil giant and rival bidder Chevron, said in a letter to President George W. Bush he was concerned any run for the company by the Chinese group represented a threat to national security.
Within weeks, what first appeared to be opposition from China hawks and Chevron loyalists grew into a chorus of resistance.
Washington attorneys familiar with the deal say the toppling of the CNOOC bid was not just a result or Chevron's lobbying prowess or Mr Pombo's campaign against the deal, which ultimately culminated in the passage of legislation that could have delayed the regulatory review of a CNOOC/Unocal merger.
They say CNOOC's biggest problem in Washington was that its attempt collided with US lawmakers' growing frustration with the US relationship with China on issues ranging from currency manipulation to trade reciprocity and intellectual property rights.
"They walked right into the two by four of Congressional angst about China and they were competing against an American company that has a highly sophisticated lobbying capability. Those two things were a very uphill climb," says Todd Malan, executive director of the Organization for International Investment, an association of foreign- owned US companies.
William Reinsch, president of the National Foreign Trade Council, says the deal was probably doomed from the start.
"We are in a time and place where every single one of these deals is going to go through extra scrutiny, because the deals give fodder to the view that China is the enemy, and we shouldn't be giving them anything because we are moving into an adversarial relationship with them," he says.
The political backlash was, some experts say, spurred by CNOOC's own missteps.
One Washington attorney who has followed the bid said CNOOC's first mistake was not pouncing on the opportunity to take over Unocal in April, when it first mulled a takeover. The delay allowed Chevron to join in.
Ultimately, Washington lawmakers who did not support the CNOOC bid did not have to look far to find points to attack. By arranging favourable financing from the Chinese government to support their bid, CNOOC gave Capitol Hill ammunition to accuse the Chinese company of being controlled by the state, according to the person who followed the deal.
"A lot of members of Congress are reluctant to weigh in on national security issues, but they saw the unfairness of the favourable terms. They were put in a way that was easy for Congress to understand," the person said.
The company's management also made tactical errors.
The Bush administration had maintained its distance during the early stages but the company's decision to request that the committee on foreign investments in the US, the panel that reviews foreign takeovers of US companies on national security grounds, begin its probe before CNOOC had sealed an agreement with Unocal forced the White House to become involved.
LOAD-DATE: August 2, 2005
# posted by Eastlaw @ 9:34 PM 
