Daily Telegraph: Tax bill rebels furious over Shell '£2bn saving': "Shell's controversial merger to create a single corporate entity called Royal Dutch Shell is understood to have saved the oil giant as much as £2billion while leaving some of its British investors with a £77m tax headache.": Friday 9 September 2005

By Christopher Hope, Business Correspondent (Filed: 09/09/2005)
 

Shell's controversial merger to create a single corporate entity called Royal Dutch Shell is understood to have saved the oil giant as much as £2billion while leaving some of its British investors with a £77m tax headache.

The news was greeted with anger by the rebel British holders in Royal Dutch Petroleum, who are refusing to accept the terms of the merger with Shell Transport and Trading in protest.

	Jeroen van der Veer

The Association of Private Client Investment Managers (Apcims), which has been campaigning on behalf of the British investors, said: "We have had more than one report that advisers said the construction saved the company more than £1billion."

Julian Mathias, a private investor controlling a £70,000 holding in Royal Dutch, said he asked an adviser from Slaughter & May at the company's annual meeting in late June why British holders in Royal Dutch were being left with a large capital gains tax bill.

Mr Mathias said: "The lawyer said it was on the grounds of cost that they did not have a tax efficient solution for UK holders of Royal Dutch. When I asked how much are we talking about, he said '£2billion'."

Angela Knight, Apcims' chief executive, said some members believed Shell had saved the money on its stamp duty bill from the transaction. "Shell has saved money so it has a responsibility to help right the wrong of leaving individual holders with a large tax bill," she said.

Brokers with clients who are holding out agreed. David Hunter, director of Smith & Williamson, said: "The fact that there was a saving of over £1billion shows that Shell thought it was something worth saving. They knew that the British holders were going to be screwed.

"The problem is that their duty is to act for the greater good of the company and if some of the shareholders get crushed then that is life. The next step for the refuseniks is to sit tight and wait to see what happens. There is no reason why they cannot offer a standard share swap."

Charlotte Black, director at Brewin Dolphin, added: "That [£1billion] is a considerable amount. From the company's point of view the saving is good news for them. But we would have thought that on the strength of that Shell might find some sort of solution." Around 1.3pc of the holders in Royal Dutch have failed to accept the terms of the merger. Shell's directors will consider what offer, including a cash squeeze out or a share swap, to put to the refuseniks at this month's board meeting.

Apcims has told Shell, whose chief executive is Jeroen van der Veer, that it believes a precedent was set when Britain's Reckitt & Colman bought Holland's Benckiser five years ago. Reckitt made an offer for Benckiser which was not acceptable for some of the Benckiser shareholders.

Once the original offer was timed out, a further two options were presented to shareholders which had not accepted: a cash offer through a squeeze out, and a share exchange. "We fail to see why Shell cannot adopt a similar procedure," Ms Knight said.

Shell said: "We never comment on rumour and speculation. As we've consistently said, this transaction is broadly tax neutral for the group and does include the payment of stamp duty. We never comment on the details of the amount of tax paid."