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The Guardian (UK): Rowdy meeting ends Shell’s 100-year split

The Guardian (UK): Rowdy meeting ends Shell’s 100-year split

Terry Macalister

Wednesday June 29, 2005

Shell shareholders voted by over 97% yesterday to end 100 years of dual company structure by merging the British and Dutch arms of the oil group into a £125bn business.

But the Shell board suffered a turbulent time at the company’s annual meeting in London before the vote was taken.

There was particular anger from small shareholders of Royal Dutch stock who accused the board of leaving them “hung out to dry” because they would have to pay capital gains tax of 40%.

One investor said the Shell board remained a poor cousin to that of rival BP. “Where is Peter Sutherland [the BP chairman]? Where is John Browne [BP chief executive]?” asked James Moorehouse.

As a series of meetings drew to an end, British institutions and other shareholders voted by 99.75% for unification.

At a simultaneous meeting in the Netherlands Dutch shareholders gave their backing by a majority of 97.4% for a move which will lead to the establishment of Royal Dutch Shell plc. The restructuring is costing £115m.

While British investors voted overwhelmingly to endorse the performance of the board, only 53.5% of Dutch shareholders did the same. Royal Dutch chairman Aad Jacobs, who becomes chairman of the combined group, admitted it would take a long time to “get back the lost confidence” after 2004 when reserves were downgraded five times.

The restructured company will be registered in Britain and have its headquarters in Holland. Jeroen van der Veer will continue as chief executive, backed by a traditional team of non-executive directors.

Shell shares rose by 3%, among Europe’s top blue-chip gainers yesterday as investors welcomed the move and expected it to lead to further gains as tracker funds are forced to raise their holdings.

Lord Oxburgh, the outgoing chairman of Shell in Britain said he felt no regret at seeing the end of the old-style company. One of the advantages of the new structure was that it would help Shell raise equity which could be used for acquisitions. Asked whether that could mean a bid for US group Unocal, which is the target of a bidding battle, Lord Oxburgh responded: “This sort of deal is not on our radar screen.”

Meanwhile Mr Van der Veer told reporters in Holland: “We certainly have our eye on acquisitions but at the moment it’s too expensive and it doesn’t create shareholder value.”

The company is seeking opportunities of between $1bn and $9bn in areas that would supplement existing operations such as liquefied natural gas, industry insiders say.

Shell tried to fend off criticism on human rights and environmental issues from Friends of the Earth. The campaign group had flown in a group of community leaders from countries including Nigeria, South Africa and the Philippines who attacked Shell for not doing enough to clear up pollution.

The London meeting was disrupted by a dozen protesters who took off their shirts to reveal black T-shirts with a doctored Shell logo including the name written without an “S”. They chanted “We must fight on” before being escorted away by security staff.

British investors were more concerned about the dividends being paid in euros rather than pounds and worried about Shell’s annual meetings being held in The Hague.

The new shares will start trading under the new name on July 20 but shareholders said the capital gains issue would hit 1% of all investors.

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