Energy Fate Of The Shell Showa Deal-Is It The Last Chapter?

Fate Of The Shell Showa Deal-Is It The Last Chapter?

Published By News Desk at October 14, 2016 08:20 am

After being long delayed, Royal Dutch Shell plc (ADR) (NYSE:RDS.A) has put up its majority stake in Showa Shell (5002.T) on the auction block - this time making a stern commitment not to delay the stake sale further. Japanese refiner Idemitsu (5019.T) remains the buyer for the venture.

Confirming the news, a spokesman for the Anglo-Dutch energy giant stated: "As today's statement from Idemitsu makes clear, there is no change to the timetable for the share sale and it remains subject only to regulatory approval."

The deal was decided to be kept at bay on Thursday after Idemitsu Kosan Co Ltd. ran into a neck to neck battle with the Idemitsu founding family. The delay raised doubts over whether the two companies would ever be able to form an alliance, provided that the founding family has the ownership of just around one-third of Idemitsu. Via this ownership, the founding family has the right to either dissolve the entire deal immediately or if not that, then exercise their veto powers on the Board decisions.

Citing its different corporate culture, the founding family debated that it could survive on its own and do well even without the takeover. On the flip side, analysts maintain that the family is showing resilience over concerns that its stake in the firm would be diluted.

Management of the Japanese company stated recently that it would move ahead with a section of the deal that includes a signed agreement to take over around 33.3% in Showa Shell from Shell at a price of approximately $1.7 billion. The deal is scheduled to complete by this month or November. Also, earlier, the founding family stated that it would be able to fetch this portion of the deal as well once it is done with the small acquisition in Showa Shell.