Unocal Board Supports Chevron’s New Offer

Unocal Corp.’s board of directors Tuesday recommended that its shareholders accept a last-minute, $17-billion takeover bid from Chevron Corp., rejecting a competing offer from China’s third-largest oil company.

Chevron boosted its offer by $2 a share shortly before the Unocal board met Tuesday night, raising its bid to $63 a share.

“Our increased offer has been driven by competitive circumstances, but even at this higher price it remains a compelling transaction for Chevron stockholders,” Chevron Chairman and Chief Executive David J. O’Reilly said in a statement late Tuesday.

Unocal’s board of directors recommended that the company’s stockholders vote in favor of adopting the amended merger at their Aug. 10 meeting.

The move appeared to be a blow to CNOOC Ltd., an affiliate of China National Offshore Oil Corp. CNOOC, which is 70% owned by the Chinese government, had offered $67 a share for Unocal last month after the El Segundo-based company had already agreed to be acquired by Chevron.

American politicians have warned that CNOOC’s effort could pose risks to U.S. national security and called for a full review by the Bush administration.

The Chinese company’s executives have welcomed a security review and denied that CNOOC was acting on behalf of China’s government, which is in the midst of a multibillion-dollar campaign to secure foreign oil and gas supplies to power its booming economy.