Financial Times: Shell to consider acquisitions under $9bn: Wednesday 29 June 2005

By James Boxell and Thomas Catan in London and Ian Bickerton in Scheveningen

Royal Dutch/Shell is understood to be considering acquisitions worth up to $9bn (£4.9bn) in the immediate aftermath of the historic unification of its Dutch and British holding companies.

Shareholders brought an end to nearly 100 years of corporate history on Tuesday when they voted overwhelmingly to merge the two arms of the Anglo-Dutch energy group.

The overhaul was primarily in response to last year's reserves scandal, which forced the company to cut its proved oil and gas reserves by one-third and led to the removal of its three most senior executives, $150m of fines and several class-action lawsuits.

But senior executives also said on Tuesday that the “momentous” dismantling of the dual-company structure would allow them to take part in oil industry consolidation. The new structure allows Shell to pay for acquisitions by issuing equity, something that had been difficult previously.

The company is believed to be willing to consider acquisitions worth up to $9bn in spite of fears that deals are expensive with crude prices of about $60.

Shares in BG Group, the independent energy group often mentioned as a potential target for Shell, rose 4 per cent on Tuesday, even though it has a market value of $30bn. Shell said it was very unlikely to make larger acquisitions in the short term.

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