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Shell’s Unified Stock Declines In First Day of London Trading

THE WALL STREET JOURNAL: Shell’s Unified Stock Declines In First Day of London Trading

“Until yesterday, the Anglo-Dutch oil group had been controlled by two separate, listed companies: Amsterdam-listed Royal Dutch Petroleum Co., which owned 60%, and London-listed Shell Transport & Trading Co., which owned 40%.

Thursday 21 July 2005

A WALL STREET JOURNAL NEWS ROUNDUP

July 21, 2005

Royal Dutch Shell PLC shares traded as a single stock for the first time yesterday, ending lower as arbitrageurs sold off the stock.

The unification leaves the company as the second-biggest stock on the London Stock Exchange, with a market capitalization of about £125 billion, or roughly €181 billion ($220 billion), slightly behind that of BP PLC.

In London, the Class A shares — owned by former holders of Royal Dutch Petroleum — closed 3.2% lower at £17.66 (€25.54) compared with the £18.25 that would be expected based on the final closing price Tuesday of €50.50 for Royal Dutch shares on Euronext and the 1-for-2 exchange ratio.

However, they were only down 0.4% compared with the temporary Royal Dutch Shell “A” stock that already traded Tuesday.

Class B shares — owned by former holders of Shell Transport & Trading — closed 1.7% lower in London at £18.06 versus the £18.38 that would be expected based on the final closing price Tuesday of 528 pence for Shell Transport shares on the LSE and the exchange ratio of 0.287.

The Royal Dutch Shell Class A shares opened at £18.08, while the Class B shares opened at £18.46.

Until yesterday, the Anglo-Dutch oil group had been controlled by two separate, listed companies: Amsterdam-listed Royal Dutch Petroleum Co., which owned 60%, and London-listed Shell Transport & Trading Co., which owned 40%.

But last month, shareholders of both companies approved a proposal to unify the company’s century-old, dual-board structure as it tries to turn the page on its energy-reserves accounting scandal.

Royal Dutch Shell Class A and B shares will now offer ownership in a single company, though they could potentially trade at a different price.

Late Tuesday, a London-based analyst had expected that the shares would bounce back yesterday as fund managers continue to adjust their holdings to the company’s increased weight in the FTSE-100 blue-chip index.

He said Shell Class B shares closed down 1.7%, as investors who had bought the stock early in anticipation of large stock purchases by index trackers were taking profits.

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