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Edmonton Sun (Alberta, Canada): Royal Dutch buys more of Shell

Sun, March 18, 2007

CALGARY — European oil giant Royal Dutch Shell PLC has acquired another 97 million shares of its Shell Canada Ltd. (TSX:SHC) subsidiary and is on the road to taking its Canadian unit private under an $8.7 billion Cdn bid announced in January.

Royal Dutch, which already holds 78% of Shell Canada, announced early yesterday that just under 97 million shares were tendered to its $45 Cdn a share offer. That amounted to about 53% of Shell Canada’s minority stake, meeting a key condition of the privatization bid.

The parent company had made the going-private offer contingent on attracting more than half of the 22% of Shell Canada it did not own. Achieving that goal wasn’t a sure thing since some large shareholders had called the offer too low and said they would reject it.

Royal Dutch’s offer expired at 8 p.m EDT Friday night, but the company extended the bid until the same time March 30 for stockholders who have not sold their shares.

With the additional stock in hand, Shell Canada appears in a position to acquire the rest of the company, though some legal hurdles may remain.  

“This is a positive outcome, and a further step towards building on our strong position in Canada, using the strengths that only a company of our global scale can bring,” Royal Dutch Shell CEO Jeroen van der Veer said in a news release early yesterday from the company’s European headquarters.

“This is an opportunity to create an integrated unconventional oil business on an international scale.”

Royal Dutch, which has been desperately seeking to secure new sources of oil since it was forced to cut proved reserves repeatedly in a 2004 accounting scandal, announced in October a $40 a share bid worth about $7.7-billion for the part of Shell Canada it didn’t own.

However, that bid was rejected by the Canadian unit’s board and the two companies negotiated a sweeter bid of $45 a share announced in January and backed by the Shell Canada board.

At the time, dissident minority shareholders warned they might go to court to force a higher offer.

Shell Canada, set up 96 years ago as a gasoline retailer in Montreal, is now a major natural gas producer and oilsands operator and runs a national network of Shell branded gasoline stations.

The company, which left the conventional oil business in Canada years ago, has also been one of the pioneers in Canada’s offshore energy exploration and helped develop the Sable Island natural gas project off the coast of Nova Scotia.

However, its future lies in the Northern Alberta oilsands, where the Calgary company operates and owns 60 per cent of the Athabasca oilsands development. That project began operations in 2003 and is designed to produce 155,000 barrels of tar-like bitumen a day.

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