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The abortive Shell Texaco merger

By John Donovan

We recently published an article about oil industry speculation that the SMART loyalty card proceedings we brought against Shell a decade ago scuttled a merger between Shell and Texaco.

Both oil giants had signed a ‘Memorandum of Understanding’ covering the UK and Europe. The Shell Smart scheme was mentioned in the Shell press statement announcing the merger plan. 

This is an updated version of the article. Additional information has come to light, including related correspondence with Shell Chairman Mark Moody-Stuart plus leaflets we distributed outside Shell HQ buildings in London, providing evidence the speculation was well founded. 

“The following is an extract from a leaflet entitled:

“A DEEP DEPRESSION IS HANGING OVER SHELL TOWER”

“Why has Mark Moody-Stuart got into such an incredible pickle? Potential merger partners such as Texaco and Chevron have almost certainly been put off by the fact that he has made a laughing stock of Shell…”

An extract from a leaflet entitled:

“SHELL – TEXACO MARRIAGE CALLED OFF”

“What I can say as a matter of fact is that Texaco has recently looked into the serious allegations that Don Marketing has made concerning the disreputable business practices of Shell. Texaco is not the only Oil Company interested in the question-mark over Shell’s reputation. At least one other major company is keeping a close watching brief on developments.”

“To ensure that all potential partners for Shell are fully aware of the situation, detailed information about the Don Marketing Saga is being distributed at the HQ offices of all major oil companies in the UK. It is also being sent to oil companies overseas, such as Chevron, who don’t have offices in the UK. They all need to be warned about getting into bed with Shell.”

An extract from a leaflet entitled:

“SHELL SHOCK!”

“Yet despite the litany of blunders and unmitigated disasters during his tenure, Mr Moody-Stuart is still brazening it out. Indeed, he has stated that he will continue to look at “merger possibilities”. I have pointed out that Texaco made inquiries regarding our allegations against Shell before the Shell/Texaco marriage was aborted. Chevron has now displayed a similar interest. No one can blame them if they are concerned about Shell’s bad reputation.” 

In a letter to Moody-Stuart dated 19 October 1998 we advised him:

“You may be interested to learn that Texaco have been investigating matters”. 

Moody Stuart had already resorted to issuing a threat against us in earlier correspondence in April 1998. His Quaker wife Judy Moody-Stuart later bizarrely intervened by writing to us herself.

Letter from Mark Moody-Stuart 9 April 1998 

http://www.shellnews.net/2004%20Documents/letters/letterfrommarkmoodystuart6april1998.pdf

The October 1998 letter to Moody-Stuart, plus associated leaflets 

http://www.shellnews.net/PDFs/ShellTexacoMergerLetterLeaflets.pdf 

An 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

http://www.shellnews.net/PDFs/IncentiveTodayplusShellJulyAug99.pdf

A year later Texaco merged with Chevron…

CHEVRON AND TEXACO AGREE TO $100 BILLION MERGER 

http://www.shellnews.net/PDFs/TexacoChevronMergerOct2000.pdf

As per normal, the information in the 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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