A
LEADING London-based hedge fund is planning to
scupper Royal Dutch Shell’s plans to complete
its corporate restructuring this week.
Trafalgar Asset Managers will on Tuesday
apply to a court in the Netherlands for an
injunction to stop Shell from buying out the few
remaining minority shareholders in Royal Dutch,
the former Dutch half of the oil group.
Trafalgar claims Shell has behaved improperly
in its conduct of the merger, in particular by
not obtaining an independent valuation of the
amount to be paid out to the minority
shareholders.
The court action could prove embarrassing
because Shell’s extraordinary meeting to approve
the buyout is scheduled for this Friday. Its
restructuring follows the storm over its
accounting for reserves last year.
The debacle led to the loss of about
one-third of the company’s reserves from its
books, $150m (£85m) in fines and a boardroom
purge that ejected chairman Sir Philip Watts.
Earlier this year, under pressure
particularly from UK investors to reform its
100-year-old dual-company basis to make it more
accountable, the company announced plans to
restructure. It said it would merge the Dutch
and English sides of the group to create a £130
billion giant called Royal Dutch Shell that
would be listed in London.
Large investors in the former Shell
companies were offered shares in the new
UK-listed group. But minority investors were
offered cash.
In the injunction application made to the
Enterprise Section of the Court of Appeal in
Amsterdam and seen by The Sunday Times,
Trafalgar claims Shell acted “in violation of
the system of law ... with the aim or
consequence of squeezing out all minority
shareholders”.
Trafalgar complains that Shell is not
paying the shareholders a fair price. It argues
that they have been offered €26.10 per share but
that they are worth considerably more. “The
applicants have strong evidence that the real
value of Royal Dutch shares is higher than two
times €26.10,” the claim says.
In court on Tuesday, Lee Robinson of
Trafalgar will claim that the Shell board is not
independent, as the same directors have sat on
the boards of both the companies that have been
merged.
He will also claim that Shell was
influenced by Dutch analysts at ABN, ignoring
the fact that the sector’s top five analysts
said the shares should be worth €30.
Shell said last night that it would not
comment in advance of Tuesday’s hearing.
This latest hurdle for Shell follows the
revolt almost as soon as the merger was
announced when the management was heavily
criticised for leaving 3,000 UK holders in Royal
Dutch with a £77m capital-gains-tax bill on
their combined £192m holding.
Trafalgar was instrumental in one of last
year’s most audacious takeover deals when BAE
Systems, Britain’s largest defence contractor,
snatched tank maker Alvis from under the nose of
US rival General Dynamics. Trafalgar and five
other hedge funds corralled a big stake in Alvis
and were able to hand BAE control.
