Oil and gas group Shell is earmarking $1.6 billion to buy out the other shareholders of Shell Midstream Partners. That is a pipeline operator in the United States. In the past, the component was independently floated on the stock exchange to easily raise money, but this financial construction has become less and less popular in the oil world in recent years.
Almost a third of Shell Midstream Partners is now owned by other shareholders. Shell wants to settle with them in cash. Converted, this concerns more than 1.4 billion euros. The activities will then transfer to Shell’s larger pipeline division.
Years ago, large oil companies found it attractive to separate parts of their companies a bit more and to join forces with other shareholders. By selling shares, money could be raised quickly. But the situation has changed in recent years. Industry peers such as BP and Phillips 66 have also taken a different course.
According to experts, interest in this structure has declined due to the oil market crash from 2014 to 2016, when oil prices plummeted. What would also play a role is that the American tax law has been amended. As a result, the construction is less favorable than before.
Shell’s move appears to be well received by investors. The share of Shell Midstream Partners was raised to almost 7 percent on the stock exchange in New York on Friday.
Shell wants to buy out co-owners of pipeline company
Source link Shell wants to buy out co-owners of pipeline company