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The Wall Street Journal: Shell Raises Offer for Canada Unit

By BROOKE DONOVAN
January 23, 2007 4:14 a.m.

LONDON — Royal Dutch Shell PLC Tuesday announced plans to raise its offer for the shares in Shell Canada it doesn’t already own by 12.5% to C$8.7 billion (US$7.36 billion), or C$45 a share, after coming under pressure from investors.

The U.K. oil major announced plans in October to buy the outstanding 22% stake in the unit, but investors and analysts said the original offer price of C$40 wasn’t high enough. Shell said Tuesday it has the full backing of Shell Canada’s board of directors in raising its offer to C$45 a share. Shell Canada’s shares closed Monday at C$44.91.

An analyst who declined to be named said the decision to increase the offer is “housekeeping” and was expected by investors, but the higher offer is still “very small” in the context of Shell’s size. “I don’t expect the shares to react much, this is just tying up odds and ends,” the analyst said.

The move on Shell Canada, a big player in Canada’s booming oil-sands developments, is relatively small potatoes for the global oil industry and for Shell, which last year reported a profit of $25.3 billion. And Shell executives have signed far more-complex deals in volatile, oil-rich regions like Nigeria and Russia. Shell Canada’s shareholders could put up a drawn-out fight for more cash, testing negotiators at Shell headquarters in The Hague, Netherlands.

Shell has posted a spotty record during the years in North American deal making. In 1985, Shell rankled U.S. shareholders with what many considered a poorly executed deal for full ownership of its main American unit, Shell Oil. Shareholder litigation dragged on for years. In 2001, Shell lost a high-profile auction for U.S. natural-gas producer Barrett Resources Corp. to Williams Cos.

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