FROM OUR ARCHIVES…
Another dampener on Shell’s biggest corporate overhaul since the two holding firms tied up in 1907, is a spat over the rights to the web domain “royaldutchshellplc.com.” Disgruntled shareholder Alfred Donovan beat Shell to register the domain name. Shell has sued Donovan for the rights to the domain but while the matter plays out, Donovan uses the site to lambaste Shell management.
The Washington Post: Shell shareholders to back unification
Friday 24 June 2005
All Reuters News DUBLIN (Reuters) – Royal Dutch/Shell shareholders are expected to vote overwhelmingly in favor of scrapping the oil giant’s century-old dual-listed structure on Tuesday.
Shell hopes the unification of its Dutch and British parent companies will improve management efficiency and accountability, areas on which the firm needs to reassure investors after a damaging reserves overbooking scandal last year.
“It’s what investors have been calling for. Hopefully it will sail through … we hope it’s going to augur a new era,” said Richard Lewis, who manages $8 billion, including Royal Dutch shares, for New Star Asset Management in London.
Shell still faces a criminal investigation and shareholder lawsuits following the revelation that it had exaggerated the size of its oil and gas reserves for years.
Many investors blamed the twin-headed structure for the lack of transparency and oversight that allowed the overbookings to go undetected for years.
Shell is currently 60-percent owned by the Royal Dutch Petroleum Co. and 40 percent by the Shell Transport and Trading Co. Executives of the operating group are drawn from the boards of each holding company.
The unified firm, to be named Royal Dutch Shell Plc, will have clearer reporting lines and has pledged to be more responsive to shareholders. Historically the firm has been criticized as aloof to investors and other stakeholders.
The new company will be base its headquarters in The Hague but have its primary listing in London. When it starts to trade on July 20, it will likely be the world’s third-largest listed oil firm with a market capitalization of more than $200 billion.
Shareholders will meet in London and Amsterdam on Tuesday.
BIGGEST PROBLEM YET TO BE SOLVED
No one expects the unification to be a panacea for Shell’s largest problem — its poor record at finding oil. The firm replaced less than half the oil and gas it pumped last year with new finds and is not expected to do much better this year.
Shell says the simpler structure will help address the issue, by improving decision making and project execution.
In the short term, the forging of a single firm should boost in Shell’s share price, by essentially forcing index tracking funds to buy more of the group’s stock.
Shell’s weighting in the benchmark FTSE 100 share index is expected to more than double.
“We do view the considerable flows expected from passive funds alone (estimated $7 billion) to be at the least a significant support for Shell shares,” Goldman Sachs said in a research note.
The existence of a single Shell share could also help the group play a bigger role in oil industry consolidation.
Shell did not participate in the last round of megamergers in the industry in the late 1990s, during which the biggest listed oil firm Exxon bought Mobil and number two BP Plc acquired Amoco and ARCO.
Shell Chief Financial Officer Peter Voser told a German newspaper earlier this month that the restructuring would allow Shell to use its shares as a currency for acquisitions.
While all indications from institutional investors and analysts are that they back the merger, some small shareholders may oppose it.
British private holders of Royal Dutch stock will be liable for capital gains tax on their shares because of the way the transaction is structured.
The Association of Private Client Investment Managers and Stockbrokers, which is representing the small investors, has lobbied Shell to change the structure so as to avoid tax claims but without success.
“Shell could not have been less helpful on this,” said Kevin Sloane, the association’s head of information.
Sloane added that he had been contacted by an 87-year-old woman who faces a 469,000 pounds ($858,800) tax bill on her holding.
Shell said it negotiated a waiver from tax authorities in the Netherlands, where a large number of the Royal Dutch private shareholders are based, but could not do the same in every jurisdiction.
Another dampener on Shell’s biggest corporate overhaul since the two holding firms tied up in 1907, is a spat over the rights to the web domain “royaldutchshellplc.com.”
Disgruntled shareholder Alfred Donovan beat Shell to register the domain name. Shell has sued Donovan for the rights to the domain but while the matter plays out, Donovan uses the site to lambaste Shell management.