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Please read the attached WSJ article

Shell to Move Headquarters to London Amid Energy Transition – WSJ.pdf

and address the following questions

What has the nationality of Royal Dutch Shell been up to now? What were the advantages of this arrangement?

What will the nationality of Shell become? Why is Shell changing after 130 years? Why now and not earlier?

At the end of the day, what has really changed in the macro environment for Shell to make such a change after 130 years of prosperity? What is the one big shift you would identify?

Shell to Move Headquarters to London Amid Energy Transition – WSJ
12/11/21, 11:30 PM
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https://www.wsj.com/articles/shell-plans-to-scrap-dual-share-structure-to-help-navigate-energy-transition-11636967889
BUSINESS
Shell to Move Headquarters to London Amid
Energy Transition
Oil giant to simplify dual British and Dutch structure, as it tries to make the company easier to value
during its shift to lower-carbon assets
Shell faces increasing pressure from investors and environmental groups over its carbon emissions.
PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS
By Sarah McFarlane Follow
Updated Nov. 15, 2021 1:17 pm ET
LONDON— Royal Dutch Shell RDS.A 0.27% ▲ PLC plans to consolidate its dual
British and Dutch structure and relocate its headquarters to London, a move it
said would help facilitate returns to shareholders and make it simpler to change
up its portfolio of assets.
The oil giant said Monday that bringing an end to its complex structure should
also make it easier for investors to value the company, at the same time it has
committed to transitioning to low-carbon energy. Shell’s shares in London
traded 2.1% higher after the announcement.
Under the plan, the company’s headquarters will be in the U.K., rather than The
Hague, and its chief executive and board meetings relocated to Britain. The
company would also take up tax residence in the U.K., instead of the
Netherlands. The restructure envisions a name change, the oil company said,
that would drop the Royal Dutch designation it has held for more than 130 years
https://www.wsj.com/articles/shell-plans-to-scrap-dual-share-structure-to-help-navigate-energy-transition-11636967889
Page 1 of 4
Shell to Move Headquarters to London Amid Energy Transition – WSJ
12/11/21, 11:30 PM
to become just Shell.
The proposal, which is set to be put to a shareholder vote next month, comes as
Shell faces increasing pressure from investors and environmental groups over
its carbon emissions.
Just weeks ago, activist investor Third Point LLC said it had built a stake in Shell
and called for the breakup of the company to improve its environmental and
financial performance. Shell has since defended its business model, saying its
strategy and customers were best served by retaining the collection of assets
and that its legacy oil and natural-gas operations were needed to fund its
investments in lower-carbon energy. Third Point didn’t address Shell’s share
structure in its note to its own investors, in which it contemplated possible
improvements to the company. Third Point hasn’t publicly asked Shell to
address its structure and declined to comment on the company’s plans Monday.
Shell has also come under pressure from
longstanding shareholders. Last month one of the world’s largest pension funds,
ABP, based in the Netherlands, said it would sell its positions in fossil-fuel
companies, including Shell, by 2023. At the time, Shell said it hadn’t been
warned about ABP’s decision and only learned about it from the media.
Separately, a Dutch court in May, ruling on a case brought by environmental
groups, said Shell should move faster to cut its emissions. The company is
appealing the verdict, saying it had been singled out unfairly. Nevertheless,
Shell said last month that it would halve its carbon-dioxide emissions from its
operations by the end of the decade compared with 2016 levels, a move that
would address part of the court ruling.
Shell said Monday that moving its headquarters from The Hague to London
wouldn’t affect the Dutch court case. In October, Shell Chief Executive Ben van
Beurden told reporters the company couldn’t run away from the court case.
“Nor do we have any intention to run away from it,” he said. “If we were to
relocate to any other country the verdict would simply follow us in terms of
enforcement.”
Friends of the Earth Netherlands, which brought the case, said Monday that in
its view the headquarters move had no implications for its case, or future court
cases at home or abroad.
The plan announced Monday is the first major change to Shell’s structure since
the 2005 unification of its two legacy companies under a single parent company.
Since then, Shell has had two lines of shares, an A and a B share, a structure that
it said Monday was never intended to be permanent. The shares have the same
voting rights and are treated equally, but one line of shares allows some
shareholders outside the Netherlands to avoid paying a Dutch dividend tax.
https://www.wsj.com/articles/shell-plans-to-scrap-dual-share-structure-to-help-navigate-energy-transition-11636967889
Page 2 of 4
Shell to Move Headquarters to London Amid Energy Transition – WSJ
12/11/21, 11:30 PM
Under Monday’s plan, rather than having
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venue, Shell would have just one set of
shares, though they would be listed in
several locations, including London and
Amsterdam.
Shell said the simplified structure could
make it easier to buy and sell assets—
flexibility the company said could be useful
as it seeks to navigate a fast-moving transition to low-carbon energy. Shell gave
the example in case of a demerger, where under its current structure it would
need to consider both U.K. corporate law and Dutch tax law. However, it said a
demerger was “not under active consideration.”
The company also cited the Netherlands’ dividend withholding tax, a 15% tax on
Dutch dividends that shareholders pay, as a consideration for its decision. In
2018, the Dutch government suggested removing the dividend withholding tax,
after pressure from companies including Shell, but in the end it scrapped the
plan.
“The imposition of a withholding tax on dividends here in the Netherlands
meant that we were driven to go to the U.K. because that was the most beneficial
way of [simplifying the company] for the greatest number of shareholders,” said
Andrew Mackenzie, Shell’s chairman. Shell said less than 10% of its shareholders
are based in the Netherlands.
Another reason the company gave for the move was flexibility to buy back
shares. Shell typically only buys back its B shares, which are often cheaper,
limiting the amount it can buy back in any quarter—an obstacle removed by
having just one set of shares.
WHAT’S NEWS
Royal Dutch Shell to Relocate to U.K., Change Name
P.M. Edition for Nov. 15. Oil giant Royal Dutch Shell is moving its headquarters to
London and dropping the “Royal Dutch” from its name, in a move aimed at
simplifying its business and facilitating returns to shareholders. Senior energy
reporter Sarah McFarlane joins host Annmarie Fertoli to discuss the plan and what
it means for investors. Read Transcript
00:00 / 11:12
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The company said a single set of shares should accelerate share-buyback
programs such as the one launched in July. That could prove useful soon
because Shell has said it plans to return $7 billion to shareholders from proceeds
of the sale of its Permian Basin assets in the U.S., though it hasn’t confirmed
what form that distribution will take.
https://www.wsj.com/articles/shell-plans-to-scrap-dual-share-structure-to-help-navigate-energy-transition-11636967889
Page 3 of 4
Shell to Move Headquarters to London Amid Energy Transition – WSJ
12/11/21, 11:30 PM
Still, plans to move headquarters between countries can become contentious
issues among shareholders and governments worried about jobs and local
investment.
Officials in the Netherlands immediately expressed disappointment Monday.
“We are unpleasantly surprised,” Stef Blok, Dutch minister for economic affairs
and climate policy, said of Shell’s decision, adding that “the government deeply
regrets” the head-office move to the U.K.
Dutch government officials are in last-minute talks to try to find a way to
encourage Shell to keep its head office in the Netherlands, a person familiar with
the matter said.
“Whether the CEO and CFO sit in The Hague, London or New York doesn’t make
any difference,” said James Hubbard, energy analyst at Deutsche Bank. “The
bigger issue is around how much controversy this causes in the Dutch press, how
upset Dutch politicians get about this.”
Shell’s proposed restructuring follows a similar move from Unilever UL 0.66% ▲
PLC in recent years. The Dove soap maker last year consolidated its dual British
and Dutch structure into a single company based in the U.K. The consumergoods company had initially planned to have its headquarters in the
Netherlands, but changed tack after a revolt by some of its British investors.
Other companies have also sought to end historic dual-share listings. In August,
BHP Group Ltd. said it would ditch its dual Sydney-London listing in favor of the
Australian city. The world’s largest mining company by market capitalization
had been under pressure from activist investor Elliott Management Corp. to
have just a London listing, while keeping the headquarters in Australia to take
advantage of certain tax credits there.
“Ultimately investors want simpler, cleaner structures,” said Chi Chan, a
European equities fund manager at Federated Hermes.
—Anna Hirtenstein contributed to article.
Write to Sarah McFarlane at sarah.mcfarlane@wsj.com
Appeared in the November 16, 2021, print edition as ‘Shell Set To Move Its Home
Office to London.’
Copyright © 2021 Dow Jones & Company, Inc. All Rights Reserved
This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit
https://www.djreprints.com.
https://www.wsj.com/articles/shell-plans-to-scrap-dual-share-structure-to-help-navigate-energy-transition-11636967889
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