To continue the dealbreaker discussion, for which the similar deal breaking issue has just been reported by NYT tonight, let's lay out the options and strategies for each party and see what kind of game play it may lead to .
1) CNOOC: the best strategy is to maintain the deal as it is now. Raising the offer will not help. Although it could put more pressure on Unocal board, but will not be able to sway their vote. However, they could raise the bid right before the shareholder vote on Aug 10 to sway the shareholders but it is going to be a long shot.
- a) A creative, though difficult to implement, solution is to "insure" against CFIUS objection through the derivative market, if they can find someone to bet (e.g.) 1 for 20 that CFIUS will approve the deal they only have to pay $500/20=25M to the insurance taker. Maybe some gambler (investment bank, or someone close to US politics - that invited some ethical question though) will take that bet, a lot of risks, but if you know the politicians......
-- this should be JP Morgan and Goldman Sach's job, as their fees are so lucrative.
- b) A better option is to "blackmail" Chevron into selling some of the Asian gas field to CNOOC.
2) Unocal: the hope is to play the 2 bidders against each other, and try to entice or trick Chevron into raising its bid. Otherwise, the best option is to stick with Chevron deal.
However, if the shareholders opt for CNOOC. Then Unocal has to join CNOOC to lobby for the CFIUS approval, because otherwise they may have end up with no deal and might(?) still be responsible for the breakup fee (Does Unocal have to pay the break up fee if shareholders (not the board) reject Chevron? I suppose it doesn't, otherwise it will be quite dumb.)
3) Chevron and its investment banks: maintain the same bid. Raise bid only in the case of (1a) or right before Aug 10. A better option is to sell off a small slice (Indonesian or Burmese gas field) to CNOOC for a 10% premium. This way they also rid themselves of a potentially troublesome asset in Myanmar. Happy meal for everyone.
4) JPM and GS: try to implement solution (1a) for CNOOC; and try to dissuade CNOOC from making a deal with Chevron as that would slice the CNOOC deal size (hence their fees) by 90%
5) Chinese goverment officials: try not to say a word if it wants CNOOC to succeed. If Unocal rejects CNOOC, it is a business decision. Do not blame Unocal, blame the neo-convervatives or "China-containers" in Washington for creating the havoc/uncertainty which sways Unocal's normal business decision.