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Reuters: Shell Canada stock below offer as bid expiry looms

Fri Mar 16, 2007 12:17 PM EDT
 
CALGARY, Alberta (Reuters) – Shell Canada Ltd. (SHC.TO: Quote) stock hovered below the price of its parent company’s C$8.7 billion ($7.4 billion) bid for the minority shareholding on Friday, a sign investors saw little chance of a sweeter offer hours before the expiry.

Shell Canada was off 22 cents at C$44.38 on the Toronto Stock Exchange.

Royal Dutch Shell Plc’s (RDSa.L: Quote) C$45 a share offer for the 22 percent of Shell Canada it does not already own is set to expire at 2000 Eastern time (midnight GMT).

Some minority shareholders of the company, one of Canada’s biggest integrated oil firms and a major oil sands producer, have said they planned to hold out for more cash, arguing the bid undervalues its prospects.

Shell Canada has embarked on an expansion of its Alberta oil sands mining operation that could cost as much as C$12.8 billion. It is also a big player in steam-driven oil sands drilling developments and the proposed Mackenzie Valley natural gas pipeline in the Arctic.

Royal Dutch Shell boosted the offer from C$40 a share in January, but that did not impress such institutional investors as Jarislowsky Fraser and I.G. Investment Management, which said at the time they would not tender.

It is not known what percentage of the minority stake is held by hedge fund players who bought the stock hoping for a higher bid from the Anglo-Dutch oil major.

One New York hedge fund investor said on Friday it is likely many will tender their shares, especially following the big recent drops in global stock markets.

“A couple weeks ago people were more bold, but I think the choppy markets and the downside have scared the (arbitrageurs),” the investor said.

Last month, Royal Dutch Shell Chief Executive Jeroen van der Veer said he was prepared to walk away from the bid and pursue other opportunities if less than 50 percent of the minority shares are tendered.

($1=$1.18 Canadian)
 

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