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** PRESS RELEASE **
ROYAL DUTCH SHELL TO BECOME LUBES LEADER WITH PENNZOIL-
QUAKER STATE COMPANY ACQUISITION
HOUSTON, March 25, 2002--Shell Oil Company, a wholly-owned member of the Royal
Dutch / Shell Group, and Pennzoil-Quaker State Company (NYSE: PZL) 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.
Paul Skinner, Managing Director of the Royal Dutch / Shell Group of Companies
and Chief Executive Officer of the Group's Oil Products business said: "The
combination of Shell and Pennzoil-Quaker State Company, the largest independent
lubricants company in the world, will make Shell a leader in the US and global
lubricants market. It also strengthens our US Oil Products business."
"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 proposed transaction, which was approved by the board of directors of
Pennzoil-Quaker State Company, represents a premium of approximately 42 percent
over Pennzoil-Quaker State Company's closing market price of $15.49 per share on
the New York Stock Exchange on March 22, 2002. The transaction has a total
equity value of approximately $1.8 billion. Shell Oil Company will also assume
Pennzoil-Quaker State Company's outstanding debt (Net book debt end
2001 = $1.1bln).
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Under the transaction, Shell Oil Company will acquire Pennzoil-Quaker State
Company through a cash merger. 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. 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.
Rob Routs, President and Chief Executive Officer of Shell Oil Products US said:
"The addition of Pennzoil-Registered Trademark- and Quaker State-Registered
Trademark-, the number one and two brands in the key US passenger car motor oil
segment, will ultimately more than replace our use of the Havoline-Registered
Trademark- brand and complement Shell's brand strength in diesel engine
lubricants."
"Combining 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-Registered
Trademark- stores will be a great strategic fit and will position Shell as a
leader in the US lubricants and car care business. Additionally, we expect
pre-tax benefits from the transaction to total approximately $140 million per
annum by 2004. One-time transaction costs and costs to achieve these benefits
are estimated to be $100 million."
Jim Postl, Chief Executive Officer of the Pennzoil-Quaker State Company said,
"This is a unique opportunity to immediately increase the value of
Pennzoil-Quaker State for the benefit of all shareholders. Pennzoil-Quaker State
will benefit significantly from being a part of an enterprise with the
geographic scope, operational scale, breadth of products and services, and
financial resources necessary to compete in a consolidating industry. This
transaction makes the combined Shell and Pennzoil-Quaker State Company a
stronger competitor in the lubricants and car care industry. I look forward to
working closely with Shell
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to achieve the timely completion of this transaction and a smooth operational
integration."
Pennzoil-Quaker State Company will be integrated with the existing Shell Oil
Products US lubricants organization in the United States and will be based in
the Houston, Texas area.
Shell Oil Products US is a leader in the marketing of fuels, lubricants,
coolants, services and solutions to consumer and business-to-business customers
in automotive, commercial and industrial sectors. Shell Oil Products US also
operates refineries and a pipeline and terminal system and has a network of
nearly 9,000 branded gasoline stations in the Western US. Shell Oil Products US
is also a 50% owner of Motiva Enterprises LLC, which refines and markets branded
products through 13,000 stations in Eastern and Southern states.
Shell Oil Company is an affiliate of the Royal Dutch / Shell Group of Companies
(NYSE: RD). For more information, please visit www.shell.com.
Pennzoil-Quaker State Company is a leading worldwide automotive consumer
products company, marketing over 1,300 products with 20 leading brands in more
than 90 countries. The company markets Pennzoil and Quaker State brand motor
oils, the number one and number two selling motor oils in the United States.
Jiffy Lube-Registered Trademark-, a wholly owned subsidiary of Pennzoil-Quaker
State Company, is the world's largest fast-lube operator and franchiser.
IMPORTANT LEGAL INFORMATION: Investors and security holders are urged to read
the proxy statement regarding the proposed transaction when it becomes available
because it will contain important information. The proxy statement will be filed
with the U.S. Securities and Exchange Commission by Pennzoil-Quaker State
Company and security holders may obtain a free copy of the proxy statement when
it becomes available, and other documents filed with the SEC by Pennzoil-Quaker
State Company, at the SEC's web site at www.sec.gov. The proxy statement, and
other documents filed with the SEC by Pennzoil-Quaker State Company, may also be
obtained for free by directing a request to Pennzoil-Quaker State Company at 700
Milam, Houston, Texas, 77002. Investors may obtain a detailed list of names,
affiliations and interests of participants in
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the solicitation of proxies of Pennzoil-Quaker State Company's stockholders to
approve the transaction at the following address: 700 Milam, Houston, Texas,
77002.
This document has been approved solely for the purposes of section 21 Financial
Services and Markets Act 2000 by Salomon Brothers International Limited, trading
as Schroder Salomon Smith Barney of Citigroup Centre, 33 Canada Square, Canary
Wharf, London E14 5LB. Schroder Salomon Smith Barney is acting for Shell Oil
Company and no one else in connection with the transaction and will not be
responsible to any other person for providing the protections afforded to
clients of Schroder Salomon Smith Barney or for providing advice in relation to
the transaction.
CAUTION CONCERNING FORWARDING-LOOKING STATEMENTS: This press release contains
certain "forward-looking statements" within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. These statements are based on
management's current expectations and are naturally subject to uncertainty and
changes in circumstances. Actual results may vary materially from the
expectations contained herein. The forward-looking statements contained herein
include statements about the proposed transaction, future financial and
operating results and benefits of the pending merger. The following factors,
among others, could cause actual results to differ materially from those
described herein: failure to obtain certain regulatory approvals; actions of the
U.S., foreign and local governments; failure of the requisite number of
Pennzoil-Quaker State Company stockholders to approve the proposed transaction;
the inability to successfully integrate the businesses of Shell Oil Company and
Pennzoil-Quaker State Company; the costs related to the merger; the inability to
achieve cost-cutting synergies resulting from the merger; changing consumer or
marketplace trends; the general economic environment; potential or actual
litigation challenging the proposed transaction; and other economic, business,
competitive and/or regulatory factors affecting businesses generally. More
detailed information about certain risk factors is set forth in the Form 20-F
filed by Royal Dutch Petroleum Company and The Shell Transport and Trading
Company and the Form 10-K filed by Pennzoil-Quaker State Company, and other
documents filed with or furnished to the SEC by Royal Dutch Petroleum Company
and The Shell Transport and Trading Company and Pennzoil-Quaker State Company.
None of Shell Oil Company, Royal Dutch Petroleum Company and The Shell Transport
and Trading Company and Pennzoil-Quaker State Company is under any obligation to
(and each expressly disclaims any such obligation to) update or alter its
forward-looking statements whether as a result of new information, future events
or otherwise.
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Contacts:
SHELL
George Smalley (Houston) (713) 277-7600
James Herbert (London) 44-207-934-3505; 44-7659-129-454
Mike McGarry (New York) (212) 218-3107
PENNZOIL-QUAKER STATE COMPANY
Ray Scippa (713) 546-8942