Globe and Mail (Canada): Shell gains on buyout speculation: Posted Saturday, 31 December 2005

CALGARY — Awash with cash, Royal Dutch Shell PLC is looking at buying out minority shareholders in its Canadian subsidiary, say people familiar with the matter.

The Anglo-Dutch energy giant major is considering taking advantage of the recent unification of its previously dual corporate structure by launching a share-exchange offer to minority shareholders in Shell Canada Ltd.

The offer could be worth some $7-billion, but sources familiar with the deliberations said such a buyout is only one possibility being examined. Other options include capital investment and external acquisitions.

Shell Canada shares rose $3.61 or 9.4 per cent to $42 in Toronto trading.

Any decision may take months, as the company needs to look more closely at the financial, legal and regulatory aspects of such an operation to avoid the pitfalls faced with previous Shell buyouts, they said. Such a move would help boost Shell's profits and simplify the decision process at a subsidiary managing some of its most promising projects, including the Athabasca oil sands project — 60-per-cent owned by Shell Canada, sources said.

Representatives of Royal Dutch Shell and Shell Canada said they don't comment on market rumours and speculation. The people familiar with the plans under consideration said the possibility has long been on the map, but “with the new structure, it's more feasible to make a share exchange,” one person said.

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