Daily Telegraph: Shell's merger offer ruled unfair: “Shell's attempt to squeeze out minority holders in Royal Dutch Petroleum (RDP) will cost the oil and gas giant as much as €675m (£458m), after it lost a court case brought by a British hedge fund in the Netherlands.”: “On Tuesday, a judge ruled Shell's offer was too low, throwing the terms of the deal into turmoil.”: "This is David versus King Kong. It's a great result for minority share-holders.": "This decision puts the issues of those who accepted Shell's offer firmly back on the table. We are going back to the lawyers on behalf of the investors and we have been in contact with Shell.": Thursday 15 December 2005

By Christopher Hope, Industry Editor (Filed: 15/12/2005)

Shell's attempt to squeeze out minority holders in Royal Dutch Petroleum (RDP) will cost the oil and gas giant as much as €675m (£458m), after it lost a court case brought by a British hedge fund in the Netherlands.

Shell is still trying to complete the merger of its UK and Dutch parts, Shell Transport and Trading and RDP, to create a £130billion giant called Royal Dutch Shell. The deal was criticised for leaving 3,000 UK holders in RDP with a £77m capital gains tax bill.

After 1.5pc of investors, representing 27m shares, failed to accept the terms of the merger, Shell then offered the minority holders in RDP €52.21 for every share held, based on the average price between July and October.

However Trafalgar Asset Managers, a hedge fund with 1m RDP shares, challenged Shell in a court in the Netherlands. On Tuesday, a judge ruled Shell's offer was too low, throwing the terms of the deal into turmoil.

An independent body will set a new figure, without an upper limit. This means Shell will have to offer anything between €60 a share and €77 a share. One source said: "It is not unheard of for these awards to be 50pc higher."

The Dutch panel will meet in the new year to decide on the final figure. Trafalgar declined to comment, but an observer said: "This is David versus King Kong. It's a great result for minority share-holders."

The news prompted the Association of Private Client Investment Managers and Stockbrokers to renew calls for Shell to compensate British holders in RDP who were left with the tax bill after accepting the original terms.

Angela Knight, the association's chief executive, said: "This decision puts the issues of those who accepted Shell's offer firmly back on the table. We are going back to the lawyers on behalf of the investors and we have been in contact with Shell."

Shell said the merger will go ahead as planned, after an extraordinary meeting of RDP's investors.

The company said: "We consider the price offered was fair and the process by which it was determined was transparent.

"We will make the case for the fairness to the court next year and will not comment further until after the court completes its review."

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