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THE BUSINESS: Bidders vie for Shell LPG shortlist

THE BUSINESS: Bidders vie for Shell LPG shortlist

“ROYAL Dutch/Shell will this week launch the $3bn (£1.7bn, €2.5bn) sale of its global Liquefied Petroleum Gas (LPG) business, putting in motion the last major element of its $ 15bn asset sale program after five months of delay.”:

Sunday 17 July 2005

By Richard Orange

ROYAL Dutch/Shell will this week launch the $3bn (£1.7bn, €2.5bn) sale of its global Liquefied Petroleum Gas (LPG) business, putting in motion the last major element of its $ 15bn asset sale program after five months of delay.

The launch of the process comes the day after the company moves to a single listing on the London Stock Exchange this Wednesday. A banker close to the sale told The Business: “The sale process will start at the end of next week.”

After sending out a document detailing the assets for sale, the first task for Citigroup, which is managing the sale, will be to draw up a shortlist before opening its books to potential bidders and taking offers. The banker said: “There’s an awful lot of people out there interested. We are going to have to whittle them down. We have got to see who’s serious and who’s not.”

A banker close to a potential buyer said that the delay from the original February launch date was understandable given the complexity of the business. It is the second largest LPG group in the world, operating in 50 different countries and heavily intertwined with Shell’s refinery businesses. He said: “It’s been very complicated: I don’t think it’s anything to do with incompetence. Separating it out is just a very difficult thing to do.”

Spanish oil group Repsol-YPF is seen as favourite to win the assets, after announcing last month that it had teamed up with UK private equity group CVC to bid. If successful, Repsol would overtake Dutch firm SHV Holdings to become the world’s leading LPG company.

But the deal has also attracted interest from a range of private equity firms. Consortiums are thought to have been set up by US firm Blackstone Group and France’s Eurazeo, France’s PAI and US-based Bain Capital, and potentially Kohlberg Kravis Roberts and Goldman Sachs, whose unsolicited bid last year prompted Shell to auction the assets.

■ Shell is thought to be targeting Aim-listed oil explorer Faroe Petroleum, worth some £60m, after it confirmed that it had sent 80 new staff to its Norway office to focus solely on exploration around the Faroe Islands, where Shell has only one licence. Tim Heeley at Panmure Gordon said: “That’s far too many people to run one licence; it would usually be 10 people at most.” The ‘Atlantic Margin” area, around the Faroes and West of the Shetland Islands, is the last area in Northern Europe where major oil discoveries are expected. Although exploration risks are high, no field has been found holding less than 500m barrels, Heeley says.

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