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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Big oil takeover brewing


Chevron employee Mario Ferrer gases up his motorcycle at a Chevron gas station near ChevronTexaco headquarters in San Ramon, Calif., on Monday. 
 (Associated Press / The Spokesman-Review)
Associated Press The Spokesman-Review

SAN RAMON, Calif. — Still riding high from its last takeover, ChevronTexaco Corp. is looking to strike it rich again with another big oil industry deal — a $17 billion acquisition of Unocal Corp.

Monday’s cash-and-stock purchase, initially valued at $62 per share by ChevronTexaco, ranks as the sixth largest in U.S. oil industry history, according to Thomson Financial.

San Ramon-based ChevronTexaco, the nation’s second largest oil company behind Exxon Mobil Corp., already has made an even bigger acquisition pay off. After a rocky start, ChevronTexaco has mined hefty returns from a $39 billion takeover of Texaco Inc. completed 3 1/2 years ago.

The company’s rising profits have been bolstered lately by the steady run-up in energy prices that have pinched consumers and businesses alike.

ChevronTexaco is betting it can make even more money by mining Unocal’s prized natural gas and oil holdings in Asia to boost its production by a compounded average of 6 percent annually through 2009.

Investors didn’t like the sound of the deal Monday, partly because ChevronTexaco’s proposed acquisition price was 4 percent below Unocal’s market value before the deal was announced. Unocal’s stock had climbed by 20 percent since the media first reported ChevronTexaco was mulling a takeover bid a month ago.

El Segundo-based Unocal, the ninth-largest U.S. oil and gas production company, also had attracted other takeover interest, raising the prospect of a bidding war. The other suitors reportedly included the China National Offshore Oil Corp., a large state-owned company, and Italian oil company Eni SpA.