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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Oblomov who wrote (36154)	7/16/2005 6:30:20 PM
From: Elroy Jetson	Respond to of 110194

China will obviously buy various assets with their U.S. Dollar surplus. Perhaps China could buy the Statue of Liberty or, better yet, purchase Wal-Mart and eliminate the middle-man. We might even consider selling heavily indebted homeowners to China as slaves. I wouldn't miss them. Perhaps the new bankruptcy law will enslave them sufficiently to their current jobs, when they cannot meet their monthly mortgage obligations to China, their ultimate Fannie Mae holder. As a former employee of Chevron, my experience suggests that Chevron is likely to acquire Unocal, and they are not likely to raise their bid price. If they don't acquire Unocal they walk away with a $500 million cash payment from Unocal - not bad, but not what they want. Do I think this is fair to China, which itself restricts acquisition of Chinese companies to only 50% ownership? Who cares? I don't. Games must be played by the rules and conditions in place at the time. Although there are many things which money alone cannot buy, China will find many things they can spend their money on. Perhaps George W Bush can give them spending lessons, as he seems to be a world-class money spender. First the big picture. Chevron has been consolidating all of their west coast allies in order to better battle Exxon which is still three times larger. BP, the same size as Chevron, acquired Amoco for the same reason. Chevron's acquisitions started almost by accident with the purchase of Gulf, followed by Texaco which itself had just purchased Getty Oil. Besides bringing Getty, Texaco was the 50% co-owner of Cal-Tex, Chevron's international retail operations. Unocal, like Texaco, has many senior employees who are Chevron alumnae. When Unocal was approached by CNOOC, they approached Chevron and struck a deal, with a $500 million penalty in the event of sale to another company, which was quickly approved by the FCC and other agencies. Chevron is paying largely with stock so is not running any risk of over-paying. Some outside Unocal shareholders, like Hutchison Wampoa, are pushing for a sale for the higher cash price to CNOOC, as they are not subject to U.S. capital gains taxes on sale. They also naively assumption that America is some sort of free-market as seen on television and in government advertisements. On August 10, Unocal will vote on the Chevron acquisition. If the vote is yes, Chevron will close the transaction before the end of business on the same day. If they vote no, I'm not sure what will happen to Unocal.