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The day it seemed Total was on the brink of a takeover bid for Shell

FROM OUR SHELL NEWS ARCHIVE FOR 15 AUGUST 2004

SUNDAY 15 AUGUST 2005, THE DAY IT APPEARED TOTAL WAS ON THE BRINK OF MAKING A TAKEOVER BID FOR ROYAL DUTCH SHELL, THE OIL GIANT WEAKENED BY THE OIL RESERVES FRAUD IN WHICH SHELL SHAREHOLDERS AND EMPLOYEES WERE INNOCENT VICTIMS

The Observer: Ailing Shell braced for French bid

Oil giant ‘could merge with rival Total’: “the possibility of a deal is now the subject of fevered speculation in the City.”

Nick Mathiason

Sunday August 15, 2004

Royal Dutch/Shell is bracing itself for a takeover bid, with Shell executives now conceding that it is vulnerable to a predator.

Insiders at the Anglo-Dutch oil giant fear Total, the French oil group, will launch a raid. Total, the world’s fourth-largest oil firm, is considered the only predator capable of gaining regulatory approval for what would be a spectacular merger.

Total is smaller than Shell, with a market cap of £68 billion against Shell’s cap of more than £94bn.

But Total’s chief, Thierry Desmarest, has shown an appetite for risk and could have ambitions for a pan-European company.

There are no indications that board members or corporate advisers have spoken about a tie-up, although the possibility of a deal is now the subject of fevered speculation in the City. If the two firms merged, competition rules would force asset sales. The firms’ refining businesses, and overlaps in Germany, France and the Netherlands, could see competition authorities demanding disposals.

But there are obvious synergies. Analysts say that Total’s strong Middle Eastern presence would bolster that of Shell’s, while a single Shell/Total business would be the dominant player in Nigeria. Unlike Shell, Total has a strong presence in Angola.

A leading City oil analyst said: ‘On paper it’s a fit, but it’s not that easy. Who would be in charge would be a major issue.’ The firm last night said: ‘We can’t comment on market rumour or speculation.’

Shell bosses admit the need to complete a large acquisition to boost oil reserves: this, however, is proving impossible, given the rocketing oil prices making prospective targets reluctant to sell.

It emerged last week that Shell was likely to unify its British and Dutch boards in response to shareholder pressure over its downgrading of oil and gas reserves

The energy group, fined £84m last week for misleading the market, could even opt for a full merger or takeover among the two holding companies. The firm still faces the prospect of a potentially damaging legal action brought by pension funds and other shareholders over the oil reserves scandal, which could lead to jail for executives.

Shell has stood on the sidelines while the oil industry has consolidated in recent years. Exxon acquired Mobil, which Shell had previously turned down. BP bought Amoco and Arco, Texaco bought Chevron, while Total merged with Elf and Fina.

BBC News: Shell ‘could be target for Total’

Shell has struggled to rebuild confidence after the reserves crisis

15 August 2004

Oil giant Shell could be bracing itself for a takeover attempt, possibly from French rival Total, a report claims.

Bosses at the Anglo-Dutch group are said to have admitted that the company is vulnerable to a predator, according to the Observer newspaper.

Total would be an obvious contender because it is believed to be the only firm capable of getting any merger proposal past the regulators.

Shell has been vulnerable since it downgraded its reserves estimates.

Reserves crisis

The company shocked the market in January by announcing that its oil and gas stocks were 20% lower than previously thought. But that was not the end of the matter – it subsequently downgraded its reserves another three times.

The crisis forced the resignations of three top executives, including chairman Sir Philip Watts and the head of exploration and production Walter van de Vijver.

The company agreed to pay more than £80m in penalties to settle inquiries by US and UK regulators into the firm’s restatement of reserves.

Meanwhile, a spokeswoman for Shell said the company would not comment on the latest takeover speculation.

SKYNEWS: SHELL FACES TAKEOVER BID

“insiders claiming French oil company Total is planning a raid.”

Posted 15 August 04

Beleaguered oil giant Shell is preparing for a takeover bid, with insiders claiming French oil company Total is planning a raid.

Shell, the Anglo/Dutch group, is worried that Total is the only firm capable of gaining regulatory approval for a buy-out.

Total’s chief executive Thierry Desmarest is understood to be keen to expand the company’s market presence through a merger or acquisition.

Total has a market cap of £68bn compared with Shell’s £94bn.

Shell bosses have previously admitted the need to boost its oil reserves.

But acquisitions have been out of the question, due to soaring oil prices resulting in a reluctance to sell by potential targets.

The Scotsman: Shell ‘Braced for Takeover Bid from Oil Rival Total’

“an inquiry found it violated reporting, record-keeping and anti-trust rules.”

By Louisa Nesbitt, City Staff, PA News

15 August 2004

Oil giant Shell is bracing itself for a takeover bid that could come from French rival Total, it was reported today.

Executives at the Anglo-Dutch group were said to have conceded that the company is vulnerable to a predator, according to The Observer.

It is understood that insiders at the oil group fear Total will launch a raid, although there are no indications that board members have spoken about a tie-up.

Although Total is smaller than Shell with a market value of £68 billion against more than £94 billion, it is thought that Total is the only firm capable of gaining regulatory approval for a merger.

It was reported that if the two firms merged, they would be forced to sell assets to comply with competition rules.

A spokeswoman for Shell said the company would not comment on market speculation, while nobody was available from Total.

Last week Shell was tight-lipped about speculation it could merge its Dutch and British holding companies as part of an overhaul following the reserves crisis.

The group has pledged to consider changes to its structure, which is currently made up of Royal Dutch, which controls 60%, and Shell Transport and Trading, the UK side controlling the remaining 40%.

These two companies have separate stock exchange listings in Amsterdam and London.

Shell rocked the market in January by announcing that its oil and gas stocks were 20% lower than previously thought. It subsequently downgraded its reserves a further three times.

The crisis claimed the scalps of three senior executives, including chairman Sir Philip Watts and the head of exploration and production Walter van de Vijver.

The company was fined 120 million US dollars (£65.5 million) by the Securities and Exchange Commission last month after an inquiry found it violated reporting, record-keeping and anti-trust rules.

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