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Royal Dutch and Shell, Together at Last

THE HAGUE/LONDON -- Royal Dutch/Shell Group shareholders voted to merge its holding companies in the Netherlands and Britain, ending a century-old separation that investors said damaged what was the world's largest publicly traded oil company, according to Bloomberg.

The votes at Royal Dutch Petroleum Co. near The Hague and Shell Transport & Trading Co. in London today will disband companies that since 1907 had operated as one with separate stock- market listings and boards of directors.

A single share may let CEO Jeroen van der Veer pay for acquisitions in stock for the first time, investors and executives said. Van der Veer is rebuilding a company that misled investors for years about the size of its reserves and still faces a Department of Justice criminal investigation and shareholder lawsuits over the matter.

"Shell needs this deal today to do takeovers, to basically find new fields through acquisitions,'' said Bob Parker, a deputy chairman of Credit Suisse Asset Management in London, which oversees $335 billion. To replace oil reserves, "you've got two choices -- you can either go into exploration or you can do takeovers.''

The new company, called Royal Dutch Shell plc, will start trading on July 20 and will have its headquarters in The Hague and be incorporated in the United Kingdom. Shell, once the largest publicly traded company, has fallen behind Exxon Mobil Corp. and BP plc in terms of revenue, production and reserves after those companies used shares for takeovers.

Van der Veer, a 57-year-old Dutchman, told reporters today that Shell currently is "not looking at large acquisitions as they are too expensive because of the high oil price.'' He defined a large purchase as "$1 billion or more.''

Shell has paid cash for acquisitions throughout its history, avoiding transactions such as BP's $56 billion stock purchase of Amoco Corp. in 1999 and the $31.8 billion acquisition of Atlantic Richfield Co. in 2000. Irving, Texas-based Exxon Corp. in December 1998 agreed to buy Mobil Corp., for $79.3 billion in stock and assumed debt.

The new stock "is a tool in our armory that we didn't have before,'' Malcolm Brinded, the head of exploration and production at Shell, said today. "It doesn't mean that anything is imminent.'' He said that Shell will consider takeovers.

Potential acquisition targets include London-based BG Group plc, whose chief executive, Frank Chapman, said April 4 that he's being asked "about once a week'' if his company is an acquisition target. Occidental Petroleum Corp. CEO Ray Irani said any offer for his company would have to be about $40 billion in cash, a 29 percent premium to its last close, according to a June 5 report in the Los Angeles Times.

Van der Veer on April 28 said he prefers to expand Shell's own projects because high oil prices make energy acquisitions too costly for now.

Shell bought Enterprise Oil plc, Britain's largest independent producer, for $7.3 billion in June 2002 and Pennzoil-Quaker State Co. for $2.9 billion in March 2002.

The Shell Transport chairman, Ronald Oxburgh, said Shell isn't considering making an offer for Unocal or for a company of that size.

"This sort of deal is not on our radar screen,'" he said today.

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