NEW YORK(AP) — ChevronTexaco Corp., the nation’s second biggest oil concern, is buyingrival Unocal Corp., the ninth biggest U.S. oil and gas exploration andproduction company, for about $16.4 billion in cash and stock. Shares of bothcompanies fell, with Unocal tumbling more than 6 percent.
Under thedeal announced Monday, ChevronTexaco would also assume $1.6 billion of debt inthe deal.
Unocal hasbeen evaluating a possible sale and reportedly had also drawn interest from theItalian oil company Eni SpA and China National Offshore Oil Corp., a largeChinese state-owned company.
The dealwould be the largest takeover in the oil sector in years, and comes as crudeoil futures prices have been hitting record levels albeit they are still lowerthan the peaks reached in the 1980s in inflation-adjusted terms.
With energycompanies struggling to boost their reserves, Unocal, based in El Segundo,Calif., has represented an attractive takeover target. Many of its assets arein Southeast Asia and they could help meet growing demand from China and India.
ChevronTexacowill issue about 210 million shares and pay about $4.4 billion in cash in theacquisition, which provides an overall value of about $62 per share based onthe closing price of ChevronTexaco stock on Friday.
Unocalshareholders may elect to receive either 1.03 shares of ChevronTexaco stock or$65 in cash for each Unocal share. Unocal currently has about 270.6 millionshares outstanding.
Unocalshares fell $4.05, or 6.3 percent, to $60.30 in eraly trading on the New YorkStock Exchange, while ChevronTexaco shares lost $1.01, or 1.7 percent, to$58.30.
