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Global oil giant ChevronTexaco Corp. agreed Monday to buy Unocal Corp. for $18 billion in stock, debt and cash, ending the bid speculation that had surrounded the smaller company for months. San Ramon, Calif.-based ChevronTexaco said in a statement it would pay about $62 a share for Unocal. It is offering 1.03 ChevronTexaco shares or $65 in cash, though it will adjust the payment to each shareholder so the payment breaks down as 75 percent stock and 25 percent cash. The price is equivalent to a discount of 1.6 percent from the closing price Friday, though the shares have risen 72 percent in the past year due to a combination of bid speculation and rising oil prices. ChevronTexaco will also take on $1.6 billion of Unocal’s debt. Various press reports in the past few months have speculated that Unocal was in play. China National Offshore Oil Corp. and Anglo-British oil giant Royal Dutch/Shell Group were reported to be interested in it. Then last month, The Wall Street Journal reported that ChevronTexaco was considering a bid. Lehman Brothers Inc. is advising ChevronTexaco, which is receiving legal advice from Pillsbury Winthrop Shaw Pittman. Morgan Stanley and the law firm Wachtell, Lipton, Rosen and Katz are advising Unocal. ChevronTexaco said that Unocal will add about 1.75 billion barrels of oil-equivalent proved reserves to its reserve base, which is equivalent to an increase of about 15 percent. El Segundo, Calif.-based Unocal has a higher percentage of natural gas reserves, so ChevronTexaco’s total would increase by about 5 percentage points to about one-third of the oil-equivalent total. The purchase will also bolster ChevronTexaco’s production in the Asia-Pacific, the Gulf of Mexico and the Caspian region. The buyer expects to sell assets after the deal closes that will likely produce proceeds of more than $2 billion. Annual savings from the deal should amount to more than $325 million before tax, said the statement. Copyright �2005 TDD, LLC. All rights reserved.

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