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SAN FRANCISCO -- China's government-owned CNOOC Ltd. withdrew its $18.4 billion bid for Unocal Corp. on Tuesday, ending a politically charged takeover battle that highlighted the United States' growing apprehension about the economic rise of the world's largest country.
The Associated Press reports that CNOOC's retreat clears the way for Chevron Corp., the second largest U.S. oil company, to complete its acquisition of Unocal next week, even though its cash-and-stock offer is currently worth nearly $1 billion less.
But Chevron had several factors working in its favor -- regulatory clearance, the support of Unocal's board and the backing of U.S. lawmakers, who questioned whether economic and national security interests would be threatened if a company backed by China's Communist government were to buy a major U.S. oil company.
Those misgivings virtually ensured CNOOC's bid would have to undergo a rigorous -- and possibly tempestuous -- review that would have prevented Unocal from being sold for at least another six to nine months, with no guarantee that the deal would ever be completed.
In a strongly worded statement, Hong Kong-based CNOOC said it might have raised its bid even higher, if not for the political backlash.
"The unprecedented political opposition...was regrettable and unjustified," CNOOC said. "This political environment has made it very difficult for us to accurately assess our chance of success, creating a level of uncertainty that presents an unacceptable risk to our ability to secure this transaction."
Chevron spokesman Don Campbell declined to comment to the AP on CNOOC's remarks, saying the company is focused on assuring a smooth transition after its Unocal acquisition is complete.
The marriage is expected to be consummated Aug. 10 when Unocal shareholders are scheduled to formally vote on the offer. CNOOC's withdrawal from the bidding is expected to turn the vote into a mere formality.
Unocal spokesman Barry Lane said the company's board remains convinced that it accepted the superior offer.