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Shell willing to negotiate
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March 28, 2001: 3:24 p.m. ET
Offering olive branch to Barrett, Shell warns latter on 'harmful' actions
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NEW YORK (CNNfn) - Shell Oil Co., a unit of Royal Dutch/Shell Group, continued to defend Wednesday its $1.8 billion takeover attempt of Barrett Resources Corp. but is now willing to negotiate.
Shell reiterated its belief that its $55-per-share offer price "represents full and fair value for Barrett." Shell said it devoted substantial resources to evaluate Barrett and other companies in the Rocky Mountain Region, Walter van de Vijver, CEO of Shell Exploration and Production Co., said in March 28 letter to Barrett's board and CEO Peter Dea.
Barrett's shares have traded in the $60s because market speculation that Shell might raise its bid or that another potential suitor might materialize, van de Vijver said. Barrett shares have climbed 35 percent since Shell announced it's offer earlier this month.
 "In Shell's view, the negotiating posture adopted by the Barrett Board may be encouraging unrealistic expectations about values in the present context and could prove in the end to be harmful to your shareholders," van de Vijver said.
He pointed to the fact that Barrett CEO Dea and some fellow directors sold Barrett shares in December for well below the $55 price, when natural gas prices were inflated.
Barrett is a natural gas and oil exploration and production company, focused mainly on the United States, mostly in the Rocky Mountain states of Colorado, Wyoming and Utah.
Barrett shares fell 51 cents to $61.09 Wednesday.
No lock-up foreseen
Shell is willing to negotiate with a binding merger agreement as soon as possible, van de Vijver said, but wants any potential deal to exclude any "lock-up" provisions such as a "no-shop" condition or break up fee. Such a deal would assure Barrett shareholders of a minimum cash purchase price and Barrett's board could still pursue strategic alternatives.
On March 7, Shell proposed a cash acquisition of Barrett Resources at a price of $55 per share and said it would launch an offer for all outstanding shares if Barrett's board did not agree to the proposal. In addition to the cash offer, Shell said it would assume some $400 million in debt.
At that time, Denver-based Barrett (BRR: Research, Estimates) shunned the $1.8 billion takeover bid and invited other companies to make competitive bids. Barrett also directed its management to pursue strategic alternatives.
Shell then bypassed Barrett's board and offered the deal directly to shareholders, setting a midnight April 6 deadline for shareholders to decide. Last week, Barrett's board unanimously rejected Shell's $1.8 billion takeover bid and called the proposed purchase "inadequate."
"When the gavel falls on this auction, your shareholders, and not the participants in the process, would have reaped the benefit of the highest offer made," van de Vijver said in the March 28 letter. "We hope our proposal demonstrates the extent of our interest in acquiring Barrett, and in establishing a presence in the Rocky Mountain Region."
Shell also expects any merger agreement with another bidder to not contain such lock up provisions which would allow shareholders, rather than a bidder, to benefit from the purchase. 
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