No longer royal and a lot less Dutch, what’s happening at Shell?


The company that will be known simply as Shell Plc saw its shares rise close to 1% on Monday, after detailing the latest steps in its continuing transformation.

In London, the RDSB line of shares was up 0.95% at 1,672.2p whilst the US-dollar dividend paying RDSA was up 1.62% at 1,667.8.

The inherent complexity – and divergent prices detailed – in the above sentence will soon be a thing of the past for Shell.

This morning the company revealed plans to reshape its identity, branding, and simplifies the oil company’s share structure.

Among a number of changes the company is changing its tax residency solely to the United Kingdom. As part of that, the company’s executive management and chief financial officer roles are to be relocated to London.

Under the new structure the company won’t meet the conditions for using the Royal designation.

As a result, the company will go remove the formal moniker that it has carried for more than 130 years.

On the stock exchange, Shell is to flatten out and simplify its share structure, that separated dividend payment across pounds sterling (represented by ‘B’ shares) and US dollars (‘A’ shares).

The dual-line set up has been in place in a merger in 2005 and, back then, the tandem approach was only supposed to be a temporary measure.

Shell told investors that a simplified single stock line would allow for accelerated shareholder distributions, for example share buybacks will be easier, as there will be a larger single pool of shares to buy-back.

“The simplification will normalise our share structure under the tax and legal jurisdictions of a single country and make us more competitive,” said Shell chair Sir Andrew Mackenzie.

Laura Hoy, analyst at Hargreaves Lansdown, described the changes at Shell as ‘net positive’ but tempered the enthusiasm noting that it “won’t change much for investors”.

“The long-term growth story for Shell still rests heavily on the oil price,” Hoy said in a note.

“For now, buoyant oil prices are keeping the group’s cash coffers topped up, which has had a positive impact on debt and given the group the means to boost shareholder returns. However, with the inevitable shift to more sustainable energy picking up steam we suspect the need to invest in greener operations will keep a lid on what the group can pass on to shareholders.”

Elsewhere, AJ Bell investment director Russ Mould added: “The London market was bolstered by the news Royal Dutch Shell is casting off its dual-share structure but unlike BHP and Unilever is not threatening divorce and has instead committed itself to the UK and remaining in the FTSE 100 index.

“The better comparison is with Unilever – which like Shell has Dutch and British roots. The consumer goods giant ended up being brought back from the brink of a move to the Netherlands in the face of angry protests from shareholders.”

“It turns out Shell didn’t need to have its feet held to the fire, and it will remain a key constituent of the FTSE as it tidies up its complex A + B share structure.”


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