Royal Dutch/Shell to Be Unified, Ending Century-Old Dual Structure

THE WALL STREET JOURNAL: Royal Dutch/Shell to Be Unified, Ending Century-Old Dual Structure

By BENOIT FAUCON OF DOW JONES NEWSWIRES

May 19, 2005

LONDON — Royal Dutch/Shell Group Thursday said its two parent companies, The Hague-based Royal Dutch Petroleum Co. and London-based Shell Transport & Trading Co., will start trading as a single stock on July 20, ending a nearly century-old dual structure.

The Anglo-Dutch oil giant unveiled the final details of its unification plan, which will result in an organization with a single board, a U.S.-style chief executive and a nonexecutive chairman. Royal Dutch and Shell Transport will propose to their shareholders, who respectively own 60% and 40% of the company, to become subsidiaries of a new parent company, Royal Dutch Shell PLC. Shareholder approval is expected on June 28.

“In publishing the full documentation Thursday, we remain firmly on track for the completion of the transaction in July,” said Jeroen van der Veer, acting CEO of Royal Dutch/Shell Group. Mr. Van der Veer will become CEO of the unified entity. Aad Jacobs will be the nonexecutive chairman of the unified group.

Since January of last year, the company has restated its reserves five times and agreed in August to pay about $150 million in fines to U.S. and British regulators to settle charges that it misled investors.

In this context, the dual board structure, which dates back to 1907, has been criticized for its opacity.

Shell’s accounting problems, though, developed amid increased difficulties in accessing new energy resources.

The company confirmed Thursday that two classes of shares would be created following the unification: A shares for Royal Dutch holders and B shares for Shell Transport holders. The shares will have identical rights except for dividends.

Shell also reiterated its dividend policy, saying the board will “increase the dividend at least in line with inflation over time.”

In addition, the company said it intends to continue the $3 billion to $5 billion share-buyback program announced in February.

In midday trading Thursday, Shell Transport’s shares were up 0.2% in London at 473 pence, while Royal Dutch was up 1% at €46 in Amsterdam.

Write to Benoit Faucon at [email protected]

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