Daily Telegraph: Shell may offer tax-efficient option to its rebel investors: "Shell admitted yesterday that it was considering a new tax-efficient offer for British shareholders in Royal Dutch Petroleum who are refusing to accept the terms of the merger with Shell Transport and Trading.": Saturday 13 August 2005

By Christopher Hope (Filed: 13/08/2005)

Shell admitted yesterday that it was considering a new tax-efficient offer for British shareholders in Royal Dutch Petroleum who are refusing to accept the terms of the merger with Shell Transport and Trading.

In a meeting with the Association of Private Client Investment Managers and Stockbrokers, Patrick Ellingsworth, Shell's executive vice president in charge of tax and corporate structure, conceded that a tax efficient solution for the British holders was one of five to six options being considered.

	Shell's chief executive, Jeroen van der Veer

Angela Knight, chief executive of APCIMS, said Mr Ellingsworth said that one option was "an alternative share for share" swap which will not result in a capital gains tax bill for the British holders in Royal Dutch.

Before the restructuring, APCIMS estimated that around 3,000 British holders, with a £192m stake in Royal Dutch, faced a combined £77m tax bill because of the restructuring.

Mr Ellingsworth told Ms Knight that the proposals, which also include forcing investors to accept cash for the shares, will be put to a meeting of Shell's board next month.

The news marks a climb-down by Shell. Previously Jeroen van der Veer, Shell's chief executive, insisted there was nothing left in his "tool-box" to help the investors.

Earlier this week Shell revealed that a stubborn rump of 1.3pc of shareholders in Royal Dutch had failed to accept the deal to create a £128.7billion oil and gas giant.

The company reiterated its threat "to use any legally permitted method to obtain 100pc of the Royal Dutch shares". It continued: "This could include a squeeze out procedure, engaging in one or more corporate restructuring transactions such as a merger, liquidation, transfer of assets or conversion of Royal Dutch into another form or corporate entity."

A Shell spokesman the APCIMS meeting was private, but that everything which was said has already been in the public domain. She added: "We are carefully reviewing the options available to obtain 100pc of the shares but no decision has yet been made."

Some of the rebels welcomed the development last night. David Hunter, a director at Smith & Williamson Investment Management, said: "Why didn't they tell us before? But what about the people who accepted their advice in the first place who could not afford to take the risk?"

Peter Buckley, chairman of Caledonia Investments, added: "I am encouraged to hear this because the last thing one wants is to deal with this on a controversial basis."