A Shell Game
Yesterday, Royal Dutch Shell Group (NYSE: RDS-A) closed at $85.18. Also yesterday, Shell Transport and Trading, Inc. (NYSE: RDS-B) closed at $87.20.
The reason these two Royal Dutch stocks have been on such an upward trend is because it was reported last week that Royal Dutch and BP PLC (NYSE: BP) are in merger talks.
One of my personal pet peeves about Royal Dutch was the number of shares they had outstanding, at one time in the billions. Over the past year, the company has been actively purchasing shares for retirement.
What I thought was odd about all of this was that the markets have set the pricing for Royal Dutch shares as noted above, but the company thinks its shares are only worth about $41.
And how do I know this. Because the company has been paying on average, slightly less than 30 Euros (1.375 euros to the dollar) per share for the shares they plan to retire.
So if the company thinks the value of its stock is $41, why would anyone want to pay $85 for the same stock?
Things that make you go hmmmmmmmm.