In a press release, Shell said that the newly purchased shares represent 53.1% of Shell Canada, bringing Shell’s total stake in its subsidiary to 86.9%. This met the condition that 50% of the shares must be tendered and, as a result, Shell is able to go ahead with its bid to acquire all of the shares that it does not own.
The group has extended the deadline of its tender offer to March 30, 2007.
Shell has been trying to acquire its Canadian subsidiary for some time. After Shell’s C$40 per share offer in October 2006 was rejected, the company increased its offer to CAD45 in January 2007.
Jeroen van der Veer, chief executive of Royal Dutch Shell, commented: This is a positive outcome, and a further step towards building on our strong position in Canada, using the strengths that only a company of our global scale can bring. This is an opportunity to create an integrated unconventional oil business on an international scale.
Bloomberg has speculated that the deal is especially important to Shell because it will allow the company to gain control of the Athabasca oil sands reserves in Northern Alberta. Shell Canada holds a 60% stake in the oil sands development, which it operates along with partners Western Oil Sands and Chevron Canada.
Shell has been looking to replace its reserves for some time, after a 2004 scandal in which it emerged the company had been overstating its reserve replacements. The vast potential of the Athabasca oil sands area should allow the company to achieve this.
