Associated Press

Los Angeles, July 25:

A major shareholder of Unocal Corp has urged the company’s board to reconsider the takeover bid by Chevron Corp over a higher offer by a Chinese state-owned oil company, saying the board may be breaking the law if it enters into a deal that forbids it from obtaining higher offers. In a July 20 letter to Unocal’s board, P Schoenfeld Asset Management LLC, which holds more than one million shares of oil and gas producer Unocal, wrote that the oil company has a responsibility to its shareholders to lobby the federal government for approval of Chinese oil company CNOOC Ltd’s bid. “It is a violation of bedrock Delaware law for fiduciaries to enter into agreements that bar them from obtaining materially higher offers,” according to a letter by the New York firm that was released on Sunday. “It is your duty

to maximize value for stockholders.”

Unocal’s board last week announced it would recommend that company shareholders accept Chev-ron’s offer after the San Ramon, California-based company boosted its cash and stock offer to $17 billion (euro14 billion). Analysts have said CNOOC, which offered $18.5 billion (euro15.2 billion), will likely have to increase its offer and add a substantial financial

guarantee if it wants to persuade Unocal shareholders to reject the Chevron bid in a vote scheduled for August 10. The proposal by CNOOC, which is 70 per cent owned by the Chinese

government, has met stiff opposition in Congress, where some lawmakers have complained that CNOOC’s offer is part of a broader strategy by communist China to hoard energy supplies

before they run out.