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Merger into Royal Dutch Shell Approved by Shareholders

Shell LogoShareholders in London and The Hague on Tuesday gave their assent to merging Royal Dutch Petroleum with Shell Trading & Transport, ending a century-old dual corporate structure at Royal Dutch Shell.

Under the new plan to kick in July 20, Royal Dutch Petroleum (RD) will be the A-class shares of Royal Dutch, and Shell Trading & Transport (SC) will be the B-class.

Presently, Royal Dutch holds 60% of the assets of Royal Dutch Shell, and Shell Trading & Transport holds 40%. The B-class shares are expected to trade at a slight premium due to the lack of Dutch withholding tax on dividend income.

Crucially, the company's weighting in many stock-market indexes, notably London's FTSE 100 benchmark, will increase, forcing index funds as well as "index hugging" actively-managed funds to buy shares. The merger also will allow the combined firm to issue shares to pursue potential acquisition targets.

Having a single stock to make acquisitions is "a tool we didn't have before. (But) we have no immediate plans to make use of it," said Malcolm Brinded, head of exploration, at the London meeting.

Shell has previously made acquisitions in cash.

U.S.-listed Royal Dutch and Shell Trading & Transport each rose over 2% in early trading. Both reached highs not seen since early March.

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Posted 30/06/05

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