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THE TIMES: Angry shareholders tell Shell to halt $5bn buyback plan

THE TIMES (UK): Angry shareholders tell Shell to halt $5bn buyback plan

“FURIOUS shareholders urged Royal Dutch Shell to suspend a large share buyback programme last night amid concerns that it might cost the group up to €220 million (£151 million).”

Thursday 11 August 2005

By Richard Irving

FURIOUS shareholders urged Royal Dutch Shell to suspend a large share buyback programme last night amid concerns that it might cost the group up to €220 million (£151 million).

Investors called on Shell to drop a $5 billion buyback, announced yesterday, while its lawyers finalise a separate deal to buy out residual shareholders in Royal Dutch, the former Dutch parent company.

Shell said that about 1.3 per cent of shareholders in Royal Dutch had failed to swap their holdings into Royal Dutch Shell, the new entity formed out of the merger of the oil giant’s Dutch and UK parent companies.

The group said it was determined to tidy up its shareholder register and it would pursue a number of options to buy out legacy shareholders in Royal Dutch including a so-called “squeeze out” — a procedure that relies on an independent arbitrator appointed by a Dutch court to establish a fair value for the shares.

Shareholders in the new entity expressed concerns that those compensation payments would be inflated by Shell’s new share buyback programme. A shareholder said last night: “If Shell is buying its own shares in the market at €27, it is inconceivable that a court would ascribe a lower value to the legacy shares in Royal Dutch. The two companies may be separate legal entities but they are backed by the same assets and the same cashflows.”

He added that shares in Royal Dutch were worth no more than €23 — the average price of shares in Royal Dutch from the day that Shell announced plans to consolodiate its parent companies, to the day on which the proposal went unconditional on July 19.

If Shell is forced to pay up to €27 for the legacy shares it will cost the group an extra €220 million. Shares in Royal Dutch Shell were €27 in the Netherlands last night.

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