Shell offers $7.4 billion for Shell Canada stake

Royal Dutch Shell PLC has offered $7.4 billion to shareholders in its Shell Canada Ltd. subsidiary for the 22% minority stake it does not already own.

Uchenna Izundu
International Editor

LONDON, Feb. 9 -- Royal Dutch Shell PLC has offered $7.4 billion to shareholders in its Shell Canada Ltd. subsidiary for the 22% minority stake it does not already own. The offer is a 12.5% increase on the bid it made last year (OGJ Online, Oct. 23, 2006).

Shell Canada is attractive to its parent company because it has a substantial position in Canada's oil sands and is embarking on a major production expansion and upgrading capacity. Shell Canada hopes to increase bitumen production to 770,000 b/d while increasing upgrading capacity to 700,000 b/d. Shell Canada's first 100,000 b/d expansion of Athabasca Oil Sands is expected in 2010.

Timing of these projects will depend on market conditions, key economic indicators, meeting sustainable development criteria, and the outcome of the regulatory process, Shell Canada said.

Shell Canada shareholders will receive documents setting out Shell's offer of $45 (Can.)/share, but investors have previously stressed that $50 (Can.)/share was reasonable. Shell also has filed a formal offer with Canadian securities regulators.

Shell Canada's board described the revised bid as "fair" and recommended that shareholders accept it. The deadline for Shell's offer expires Mar. 16 unless it is withdrawn or extended.

Contact Uchenna Izundu at uchennai@pennwell.com.

More in General Interest