(Alliance News) - Royal Dutch Shell PLC on Wednesday said it has held early talks with Third Point, after the activist shareholder went as far as suggesting the oil major should split.
Reuters, citing a source close to the matter, on Wednesday reported activist investor Daniel Loeb's Third Point has built a stake worth nearly USD750 million in Shell.
In a third quarter investor letter, Third Point said it "initiated a position" in Shell.
Third Point argued that Shell has "too many competing stakeholders pushing it in too many different directions", resulting in "incoherent, conflicting" strategies.
Third Point said: "Some shareholders want Shell to invest aggressively in renewable energy. Other shareholders want it to prioritize return of capital and enjoy the exposure to legacy oil and gas. Some investors think Shell should shrink to grow, while we suspect some within Shell seem sentimentally attached to its 'super major' legacy.
"Some governments want Shell to decarbonize as rapidly as possible. Other governments want it to continue to invest in oil and gas to keep energy prices affordable for consumers."
Third Point said all Shell stakeholders would benefit from an optimised corporate structure. The activist investor group also said Shell could "match its business units with unique shareholder constituencies who may be interested in different things", using the example of some investors preferring a return of capital and others growth.
Finally, Third Point is pushing for Shell's split into multiple standalone businesses, including a legacy business focused on oil and gas and another arm which could deploy "aggressive" investment in renewables and other carbon reduction technologies.
In response, Shell said it regularly reviews its strategy "with a focus on generating shareholder value".
"Shell welcomes open dialogue with all shareholders, including Third Point. Shell's Investor Relations team has had preliminary conversations with Third Point and we will engage with them, as we do with all of our shareholders," the company said.
"Shell's investor relations team has had preliminary conversations with Third Point and we will engage with them, as we do with all of our shareholders."
Reuters noted that the Wall Street Journal, which first reported the matter, had put the size of the stake at more than USD500 million.
Shell on Wednesday also noted its Powering Progress strategy received the backing of 89% of shareholders at May's annual general meeting. The strategy aims to accelerate the transition to net-zero emissions.
Shell reports third quarter results on Thursday.
By Eric Cunha; ericcunha@alliancenews.com
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