Shell Acquires Pennzoil-Quaker State

Shell Oil Company and Pennzoil-Quaker State Company 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 U.S. and global lubricants market. It also strengthens our U.S. Oil Products business.

"This transaction, along with our previously announced transactions in Germany with RWE DEA and in the U.S. regarding Texaco's former interests in Equilon and Motiva, marks another important step in extending our sustained downstream leadership outside the U.S. 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).

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(R) and Quaker State(R), the number one and two brands in the key U.S. passenger car motor oil segment, will ultimately more than replace our use of the Havoline(R) 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 2,000 Jiffy Lube(R) stores will be a great strategic fit and will position Shell as a leader in the U.S. 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 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 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.


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