Shell abandons Dutch, moves to London to overhaul equity structure
The Anglo-Dutch company has had a protracted dispute with Dutch authorities over the country’s 15% dividend withholding tax, which Shell has sought to avoid paying with its two classes of shares. Its new single structure solves that problem and allows Shell to make purchases or acquisitions more quickly.
In a further move to its ties with the Netherlands, the Netherlands’ largest state pension fund ABP said last month it would remove Shell and all fossil fuels from its portfolio. me.
The Dutch government on Monday said it was “uncomfortably surprised” by Shell’s plan to move to London from The Hague.
However, the decision will be seen as a vote of confidence in London after Britain’s departure from the European Union resulting in the displacement of billions of euros in daily stock trading from the UK capital to Amsterdam. .
Shares of Shell, which will still be trading in Amsterdam and New York as planned, rose more than 2% in London on Monday morning following the news.
“The current complex equity structure has many constraints and may not be sustainable in the long term,” Shell said.
The move, the company said, requires at least 75% of shareholders’ votes at the general meeting of shareholders to be held on December 10.
“We see value in the proposed restructuring of Shell’s share structure and residency tax. Among other benefits, the proposed changes would increase the likelihood that Shell will be restructured,” Jefferies said in a research note. ability to buy back shares of Shell”.
Shell said it would return $7 billion from the sale of US assets to ConocoPhillips along with an ongoing share buyback program.
Monday’s move follows a major overhaul Shell completed this summer as part of a strategy to shift away from oil and gas to renewables and low-carbon energy. The overhaul includes thousands of job cuts around the world.
In May, a Dutch court ordered Shell to cut its planned greenhouse gas emissions to match the Paris climate agreement to limit global warming to 1.5 degrees Celsius. Shell has said they would appeal.
Adam Matthews, Responsible Investment Manager at Church of England Pensions Board, a Shell shareholder, said: “If this decision will give the company more agility to make the transition to zero, net, it should be viewed positively”.
Matthews, who led negotiations with Shell on behalf of the Climate Action 100+ investor group, said it should not remove Shell’s responsibility for implementing the Dutch court’s ruling.
Shell is also battling calls made last month from activist investor Third Point for the company to be split up into multiple companies. Top Shell executives hit back, saying the company’s businesses work better together.
Giant corporations are under increasing pressure to simplify their structures when General Electric, Toshiba and Johnson & Johnson announced plans to spin off separate companies last week.
Double listings, which are more expensive to maintain, are also out of favor.
Consumer products giant Unilever abandoned its Anglo-Dutch dual structure last year in favor of a single company headquartered in London. Miner BHP Group has also called time on such a structure.