Shell Oil Company announces $1.8 billion acquisition of Pennzoil-Quaker State Company

Shell Oil Company, a wholly-owned member of the Royal Dutch / Shell Group and Pennzoil-Quaker State Company today announced that they have entered into a definitive agreement under which Shell Oil Company will acquire Pennzoil-Quaker State Company at a price of $22.00 per share in cash.

Under the proposed transaction, which was approved by the board of directors of Pennzoil-Quaker State Company, Shell Oil Company will acquire Pennzoil-Quaker State Company through a cash merger. Based on Pennzoil-Quaker State Company's outstanding shares on a fully diluted basis, the transaction has a total equity value of approximately US$ 1.8 billion. Shell Oil Company will also assume Pennzoil-Quaker State Company’s outstanding debt (Net book debt end 2001 = $1.1bln). Completion of the transaction is subject to approval by Pennzoil-Quaker State Company stockholders and customary reviews by regulatory agencies in the United States and other relevant jurisdictions.

Philip Watts, Chairman of the Committee of Managing Directors of the Royal Dutch / Shell Group of Companies, commenting on the acquisition, said: “This acquisition is part of our continuing efforts to upgrade our portfolio, and it also makes an early contribution to Group earnings and cash flow. This is an important move in the implementation of our Group strategy, which we communicated in December 2001, with deals of this type building excellent platforms for earnings growth into the future.”

Paul Skinner, Group Managing Director and Chief Executive Officer of the Group’s Oil Products business said: “This transaction, along with our previously announced transactions in Germany with RWE DEA and in the US regarding Texaco’s former interests in Equilon and Motiva, marks another important step in extending our sustained downstream leadership outside the US into a global position.”

"The addition of Pennzoil® and Quaker State®, the number one and two brands in the key US passenger car motor oil segment, is a step change to our US lubricants portfolio and will ultimately more than replace our use of the Havoline® brand and complement Shell’s brand strength in diesel engine lubricants. We see a great strategic fit between Shell’s networks and infrastructure and Pennzoil-Quaker State Company's leading motor oil brands and portfolio of other businesses, such as its car care brands and its large network of over 2000 Jiffy Lube® stores.”

It is expected that the transaction will be completed in the second half of 2002 and be accretive to Shell's earnings and cash flow from the first full year after completion. Shell expects that the acquisition will generate pre-tax benefits of approximately $140 million per annum by 2004. Transaction and implementation costs are estimated by Shell at $100 million.