National Security: The Next Wave in Takeover Defences?

Last week’s unsolicited US$18.5 billion bid by China National Offshore Oil Corporation for Unocal Corporation is further evidence that China’s state-owned corporations are emerging as serious bidders for North American companies. This bid is the largest foreign acquisition ever attempted by a Chinese company.

It is the latest in a line of recent transactions involving Chinese companies, which include the proposed purchase of Maytag Corporation for US$1.12 billion, the acquisition of IBM’s personal computer business for US$1.75 billion and two investments in Canada’s oil sands (the purchase of 40% of Synenco Energy Inc.’s Northern Lights Project for C$105 million and the purchase of 17% of MEG Energy of Calgary for US$123 million). In the fall of 2004, a Chinese state metals trading company was in exclusive (but ultimately unsuccessful) negotiations to buy Canada’s Noranda Inc., the world’s third-largest zinc and ninth-largest copper producer, with a market capitalization of about C$7