Too hard? Well, the answer is that the one on the left was given to the Slug by a Chinese friend. The one of the right by an American friend.
Still don’t get it? Then how about taking this example of one man’s dollar being worth less than another and apply it to the oil industry where a dollar from the China National Offshore Oil Company (CNOOC) is apparently worth a lot less than a dollar from Chevron.
Now you get it. Here we have CNOOC saying it wants to pay $US18.5 billion for Unocal, but the board of Unocal is recommending a rival bid from Chevron valued at $US17 billion.
The Slug, to say the very least, is bemused at what appears to be a blatant case of politics interfering with the business process – and not just petty politics either.
The Unocal takeover battle has the potential to set the scene for very interesting times ahead – and that is said while remembering that great Chinese curse, “may you live in interesting times”.
What appears to be happening is that American business and politics are acting in concert to thwart the acquisition of rather modest oil company – not because of the bid itself, but more because of what it says about the future.
The great fear in the US is that if CNOOC succeeds in acquiring Unocal, it could be the thin edge of the wedge. After Unocal, why not ExxonMobil, or Chevron itself?
True believers in things American will find this a perfectly reasonable argument. The Chinese are, after all, the great enemy – aren’t they?
It’s when you get to this point in contemplating Chevron v CNOOC that the questions raised become extremely complex, and while The Slug has a natural leaning towards America in preference to China, it is never wise to prostitute the business process with political considerations for a very simple reason – where does it end?
If this takeover battle was being fought purely on business considerations there is little doubt that CNOOC would (and should) win.
While some outsiders may question whether CNOOC has the capacity to actually complete the deal, it has put an extra $US1.5 billion on the table – and Unocal has says it doesn’t want the money.
So far, no-one has asked the shareholders of Unocal what they think about this rejection, and The Slug reckons that a few rather pointed questions might be asked at the Unocal shareholders meeting set for August 10.
How about this for a possible exchange: Shareholder asks – “Why are we knocking back $US1.5 billion?” Chairman answers – “Because it’s Chinese money”.
The rest of that Q&A is left to the reader’s imagination, but the point is made that here is one of the first cases of global politics directly interfering with a business deal and, as China grows in economic strength, The Slug reckons it won’t be the last.
