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Shell Texaco merger torpedoed by the Donovan’s?

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Screen Shot 2014-04-05 at 17.36.25By John Donovan

We often needle Shell management by bringing up our role in the Russian seizure of the Sakhalin-2 project. Our intervention cost Shell billions of dollars. This was at a time before the poisoning of Alexander Litvinenko in London when relations with the Putin regime were rather better than today. Frankly, we now prefer Shell management.

We were recently reminded of a role we inadvertently played in scuttling a merger between Shell and Texaco a decade ago. Both oil giants had signed a ‘Memorandum of Understanding’ covering the UK and Europe. The Shell Smart scheme was mentioned in the press statement by Shell announcing the merger plan.

We sent a letter to Shell Chairman Mark Moody-Stuart on 19 October 1998 mentioning that Texaco was investigating. We also circulated leaflets at Shell Mex House and the Shell Centre speculated that our litigation with Shell had undermined the merger discussions.  A file containing the letter and leaflets can be viewed here.

A article published by Incentive Today in July 1999 under the headline “Don and Shell end Smart row” stated: 

“Speculation in the industry suggests that the sudden capitulation points to the possibility of a merger between Shell and another major petrol brand.”

It quoted an ex-Shell employee as saying:

“This has been an on-going saga for so long now, one could reasonably assume that the action had become a fly in the ointment for any potential deal. From the language of the statements it does seem that Shell has wanted to draw a line under this action and secure the future of Smart. This could now pave the way for a merger, and Texaco would be the likely candidate.”

The article went on to say:

“Shell’s proposed merger with Texaco was halted last year. Uncertainty over the long-term legal ownership of the Smart concept would certainly be a barrier to such a deal.

Link to the article and the Shell/Texaco Press Statement

A year later Texaco merged with Chevron...

CHEVRON AND TEXACO AGREE TO $100 BILLION MERGER

As per normal, the information in the above magazine article about the Don/Shell/Smart settlement was a Shell smokescreen designed to hide the true settlement terms from Shell employees and shareholders. Contrary to the impression conveyed in a so called “joint” press statement, Shell paid all my legal costs. I also received a secret payment not even disclosed to the trial Judge. Shell General Counsel Richard Wiseman recently confirmed to me in an email that the terms were withheld from the Judge.

My barrister at the trial (Geoffrey Cox MP QC) colourfully described me as a carbuncle on an Elephants arse. Some at Shell may agree with that description. Others may possibly speak about me in stronger terms.

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