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THE WALL STREET JOURNAL: Shell to Retain LPG Assets

By BENOIT FAUCON
LONDON — Royal Dutch Shell PLC said Friday it had decided to retain its liquefied-petroleum-gas assets, which it had put up for sale in September 2004.
“Having fully tested the market, we have concluded that there is better value for Shell shareholders in retaining these profitable businesses,” said Ron Blakely, executive vice president of finance for Shell's downstream, or refining and marketing, unit.
“This is a financial decision, and not a change in strategy,” he added.
The decision not to divest the global LPG unit more than a year after saying it was for sale looks “clumsy,” said NCB analyst Peter Hutton. But Mr. Hutton added it's also a good sign, as it shows the Anglo-Dutch company wasn't ready to sell the asset at any price to fund possible acquisitions.
A Shell spokesman said that even without the sale, the company achieved its 2004-2006 divestment target of $12 billion to $15 billion in 2005, one year ahead of schedule.
The company decided to look into a sale of the LPG unit, which produces and markets propane and butane for consumer and industrial applications, following an unsolicited approach announced in September 2004.
People familiar with the sale said Kohlberg Kravis Roberts & Co. and Goldman Sachs Capital Partners, part of Goldman Sachs Group Inc., had together offered between $2 billion and $2.5 billion at the time. KKR and Goldman Sachs have never commented on the offer.
However, potential buyers such as Repsol YPF SA and French private equity firm PAI Partners proposed $2 billion for the business at the end of December 2005, other people involved in the process later said. Repsol has confirmed it made a bid but hasn't specified the amount. PAI hasn't commented on the matter.
Shell also has never commented on the names of potential buyers.
Shell said in January it was ready to divest the unit in parts, reversing a previous decision to sell the unit in one block.
However, since Shell announced it could divest the business, the company said it has sold country units — including Portugal, parts of the Caribbean, Brazil, Paraguay and Italy — for around $350 million.
LPG products are particularly popular for domestic central heating and cooking, especially where gas mains aren't available.
Write to Benoit Faucon at [email protected]

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