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GulfNews (UAE): Bid for Shell Canada leaves investors cold

Published: 21/01/2007 12:00 AM (UAE)
Reuters

Calgary: A 15-20 per cent boost to Royal Dutch Shell’s C$7.7 billion ($6.6 billion) bid for the minority shares of Shell Canada may still be not enough to win support from investors, one institutional shareholder said on Friday.

Royal Dutch has been working behind the scenes to sell investors on the idea of raising its bid for the 22 per cent of Shell Canada it doesn’t already own to C$46 to C$48 a share from C$40, according to a report in the Globe and Mail newspaper, which cited unnamed investor sources.

Aiming to bolster its own reserves with Shell Canada’s extensive Alberta oil sands holdings, the Anglo-Dutch oil major said in October it aimed to buy out the minority.

A C$48 bid would put a value of C$8.7 billion on the minority interest in Shell Canada.

Analyst Tom Ebbern of Tristone Capital said he would not be surprised if Royal Dutch Shell tried to lock up support for a higher bid, as investors had widely deemed the offer as too cheap, taking into account the company’s prospects.

Shell Canada shares have been above C$40 since Royal Dutch Shell disclosed its intentions, despite oil prices that have slid to near $50 a barrel from highs of $78.

If the parent can’t entice institutions to a bid, the risk for investors could be that it decides to leave the structure as is, prompting a drop in the stock, Ebbern said.

“You can only push the envelope so far. You’ve got a falling crude quote,” he said. “If I was Royal Dutch I might just say, ‘Fine. I’ll just go away. We may revisit this. Let’s talk again when oil’s at $40’.”

Investors are still waiting for Shell Canada’s special board committee to rule on the bid. There is no deadline set for the report, Shell Canada spokeswoman Jan Rowley said.

Shell Canada shares rose 84 Canadian cents, or two per cent, to C$44.92 in Toronto. Royal Dutch Shell rose 13 pence to 1729 pence in London.

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