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Daily Telegraph:
Shell finally does the decent thing: "Shell performed an
embarrassing U-turn this week and offered new tax-free
merger terms to British investors in Royal Dutch
Petroleum who were refusing to agree to the unification
with Shell Transport & Trading. However, Shell is
risking the wrath of British shareholders in Royal Dutch
who accepted the terms of the deal":
(Filed:
24/09/2005)
The petroleum giant finally does the
decent thing over punitive merger terms, reports
Christopher Hope
Shell performed an embarrassing
U-turn this week and offered new tax-free merger terms
to British investors in Royal Dutch Petroleum who were
refusing to agree to the unification with Shell
Transport & Trading.
However, Shell is risking the wrath
of British shareholders in Royal Dutch who accepted the
terms of the deal and have been left with a
multi-million pound tax bill. Shell said it believed it
was not "appropriate'' to compensate them.
The Association of Private Client
Investment Managers and Stockbrokers, which has been
campaigning on the issue, said: "This is a clear message
to large corporations that they have to look after the
interests of all of their shareholders, not just some.''
Shell's plans to create a
£130billion giant called Royal Dutch Shell earlier this
year were heavily criticised for leaving 3,000 UK
holders in Royal Dutch with a £77m capital gains tax
bill on their combined £192m holding.
In the months leading up to the
merger, Shell's chief executive, Jeroen van der Veer,
insisted that there was nothing in the company's
"toolkit'' to help the British shareholders because it
had been structured as fair to all on a pre-tax basis.
However, after 1.3pc of investors in
Royal Dutch failed to accept the deal, Shell decided to
reconsider its options.
Mr van der Veer agreed to offer
tax-efficient loan notes which can be swapped for shares
in the new company.
Shell said: "UK resident Royal Dutch
shareholders will be offered the opportunity to elect to
receive loan notes that are exchangeable. These loan
notes will provide the ability to achieve a roll-over
for UK capital gains purposes.''
Shell defended the U-turn, saying
the loan note was not available to investors before the
offer period closed last month because the boards of
Royal Dutch and Shell Transport had insisted the offer
should be the same for both sets of shareholders.
Shell sources insisted they only
realised in the past fortnight the loan note could be
offered as part of a tidying up of various intra-company
share holdings. Shell decided it would not be
"appropriate'' to offer help to investors who had
accepted and were left with a tax bill.
The spokesman said: "Royal Dutch
Shell does not believe that it is appropriate to make
payments to some shareholders for their individual tax
liabilities which are computed with reference to their
individual circumstances.
"In addition, UK shareholders who
accepted the Royal Dutch offer will have the tax base
cost of their investment reset, which may reduce or
eliminate the capital gains tax arising on future
disposals. On this basis, it would be inequitable for
Royal Dutch Shell to make payments to these shareholders
for their tax liabilities.''
Julian Mathias, one of the rebels
whose 92-year-old mother would have been left with a
£21,000 tax bill on her £76,000 taxable gain as a result
of the shake-up, said: "I am not enthusiastic about it
but it is better than nothing. It is the least bad
option.''
Angela Knight, Apcims' chief
executive, said she believed Shell was stung into action
when it realised the strength of the protests from
high-profile rebel investors such as Peter Buckley,
chairman of Caledonia Investments, and City broker Smith
& Williamson: "I think they realised that they had made
a big mistake. I don't think they thought people would
protest.'' Ms Knight feared there was little that could
be done for Royal Dutch holders who accepted the merger
terms "under duress''.
She said: "We can't see how there is
any way back. They will be stuck with the tax bill. They
should write to their MPs to get the issue raised.''
Charlotte Black, marketing director
of Brewin Dolphin, said it was "great news that
commonsense has prevailed''. She added: "It is
unfortunate it took such pressure for the company to see
its error."
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