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The Calgary Herald: Royal Dutch makes final offer for Shell Canada: $45 per share on the table for Shell Canada

Lisa Schmidt, Calgary Herald; with a file from Reuters
Published: Friday, February 02, 2007

Royal Dutch Shell PLC says it is ready to abandon its bid to buy out Shell Canada Ltd. if minority shareholders do not accept its sweetened offer of $8.7 billion.

“The $45 per share offer, we think, is full and fair value . . . so it is now for the minority shareholder to make up their mind,” chief executive Jeroen van der Veer said on Thursday.

“At a certain moment, if we don’t get enough people who are prepared to take this full and fair-valued offer, then we move on . . . We have plenty of investment opportunities.”

Some Shell Canada investors said they were disappointed with last week’s revised offer for the remaining 22 per cent of shares not already owned by Royal Dutch. The Hague-based energy giant last week raised its bid from an offer in October of $40 a share, or about $7.7 billion, as it seeks to secure a bigger stake in Alberta’s growing oilsands business.

Len Racioppo, chief investment officer at Jarislowsky Fraser in Toronto, said he still values Shell Canada’s stock at $50 a share and doesn’t plan to tender at the latest offer.

“We really think the growth prospects are great for this company longer term,” he said in response to van der Veer’s comments.

“It plays both ways — he thinks $45 is fair number and we think it’s not and therefore we’re prepared to stay and grow with (Shell Canada) as a minority shareholder.”

Shares of Shell Canada closed down 36 cents to $44.90 on the Toronto stock exchange on Thursday.

The stock has risen about 37 per cent since Royal Dutch launched its initial bid.

The offer is conditional on a majority of Shell Canada’s minority shareholders accepting the bid, which is supported by Shell Canada’s board of directors. A takeover bid circular is expected to be mailed early this month.

Royal Dutch has been looking for new sources of oil and gas after an accounting scandal in 2004 forced the company to repeatedly write down its reserves. The company has said the move will simplify North American operations and increase resources to develop oilsands holdings.

Shell Canada owns a majority stake in the Athabasca Oil Sands Project, Canada’s third major mining project near Fort McMurray, which produces 155,000 barrels of oil per day with plans to expand another 100,000 bpd.

The company plans to eventually ramp up oilsands production to 770,000 barrels a day.

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