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Shareholders Set to OK Shell Unification (AP)

Schaeffers Research, Ohio: Shareholders Set to OK Shell Unification (AP)

28 June 2005

By ANTHONY DEUTSCH Associated Press Writer

THE HAGUE, Netherlands

Shareholders are expected to approve the merger of the Anglo-Dutch parent companies of Royal Dutch/Shell on Tuesday, ending a century-old dual corporate structure at the world’s third largest oil producer.

Shell announced the plans along with its third quarter earnings on Oct. 28. The announcement came amid a scandal over the repeated downgrading of its strategic oil reserves, which form the backbone of its business.

The Royal Dutch/Shell Group businesses have been managed as a single unit since 1907, but it is owned by two parents, Shell Transport & Trading Co Ltd., which holds 40 percent, and Royal Dutch Petroleum Co., which holds 60 percent.

Under the proposal to be voted on Tuesday, those two parent companies will merge and form the supervisory board of the new company. It will be named Royal Dutch Shell PLC and be based in London, though its physical headquarters and tax home will be in The Hague, Netherlands.

If the proposal passes, shareholders will receive holdings in the new, single company on a one-for-one basis. The stock is scheduled to trade on international exchanges under the new name from July 20.

In an invitation to investors, Shell called the annual shareholders meeting, held in the seaside resort town of Scheveningen near The Hague, “historic.”

“We ask you to vote in favor of a unification proposal that will bring you: one company, one board and one chief executive. We expect the unification to strengthen the group by delivering the benefits of greater clarity, simplicity, efficiency and accountability.”

Market watchers generally approve of the streamlining of management and more transparency, but will be most interested in hearing if the reserves are now accurately evaluated. Analysts will also be looking for long-term guidance from Chief Executive Jeroen van der Veer.

Positive sentiment over Shell’s recent high income statement has been tempered by the repeated cutting of reserve estimates. In February, it announced the fifth restatement in just over a year. In all, reserves have been cut by 5.8 billion barrels to 12.95 billion barrels at the end of 2003.

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