(WSJ) Third Point LLC is urging Royal Dutch Shell PLC to split into two companies to attract and retain investors dumping the stock on environmental concerns.
Third Point, which now has a huge stake of above $500 million in Shell, believes that if the oil giant splits, it would clarify the company’s strategy and appeal to eco-conscious investors.
Third Point wants one unit of Shell to focus on legacy businesses that generate steady cash flows such as refining. The investor wants the other unit to house renewables and operations that need significant investments.
The investor says preliminary talks have been held with Shell, although it is not clear whether the oil giant will be receptive to the idea of separating into two entities.
Shell has been receptive to dialogue with investors on emissions reductions. The investors are still concerned that the company’s uncertainties in energy transition make it difficult to project future earnings.
Shell has a market value of almost $200 billion, and Third Point, which is one of its biggest investors, believes the company is still trading at a discount.
RDSA: AMS is down -2.62%.
