Valero Energy rumored to be target of possible takeover attempt by India's Reliance Industries, which could pull in Shell, CNOOC of China; announcement on a big energy deal said to be imminent
October 27, 2011
– Valero Energy Corp. might be the target of a possible bidding war, and several major international oil conglomerates could be interested in making offers, the Daily Mail reported on Oct. 26.
Netherlands' Royal Dutch Shell PLC, India's Reliance Industries Ltd. and China’s CNOOC Ltd. are all said to be interested or could become involved in a possible attempt to acquire Valero.
Reliance is said to be ready to spend some of the £7.9 billion (US$12.73 billion) it now has on hand by launching a US$48-per-share offer for Valero. If Reliance decides to go after Valero, Shell and CNOOC could get involved, the Daily Mail reported.
Any day, an announcement is expected on a big energy deal in which Citibank and JP Morgan are both advising, according to the Daily Mail.
San Antonio, Texas-based Valero’s shares were trading lower on Wall Street Monday amid talk that one of its U.S. refineries is in trouble. The company operates 15 refineries worldwide.
However, after the rumor of a possible takeover attempt was reported by the Daily Mail, Valero’s shares rose 8.8% in early trading on Tuesday, The Wall Street Journal reported on Oct. 26, noting that after languishing for much of this year, Valero’s stock has gone up 23% in the past month.
A Valero spokesperson declined to give the Journal any comment on the rumor, noting that it was against company policy.
While other oil companies, including Pennsylvania-based Sunoco Inc., are leaving the oil-refining business due to tightening profit margins, Valero has been buying refining equipment from those companies.
Valero, which is the largest independent oil refiner in the U.S., recently completed a $325-million acquisition of an Arkansas-based Murphy Oil Corp. refinery in Louisiana and earlier in 2011 bought a British refinery from California-based Chevron Corp., the Journal reported.
The primary sources of this article are the Daily Mail, London, England, and The Wall Street Journal, New York, New York, both on Oct. 26, 2011.