Study questions for the Royal Dutch /Shell case

The purpose of a case is to challenge you to identify the key issues of the decision situation at hand. Here are a few pointers:

• Describe the structure of Royal Dutch/Shell Group. Does it differ from the equity listing of the other companies that you know?

• What are ADR's? Why companies might find it attractive to issue ADR's? Why would investors be interested in this method of raising equity capital?

• Identify price differentials between different equity listings of the RDS group. How can they be explained? What percentage of the particular price differentials you identified can be due to the explanations you suggested? (Please be very specific!!!)

• Is there an arbitrage opportunity in the price differentials you identified? What kind of arbitragre transactions would you propose to exploit these opportunities?

• Calculate the net payoffs of the arbitrage transactions you are suggested. Can such transactions enforce market discipline? What kind of risk are you bearing while executing your strategy?

• On the basis of your analysis and the findings presented in the case, what other suggestions would you propose to explain the observed phenomena? To what extend can you provide satisfactory answer? 

Please use data from here. Note that the prices that are quoted currently are different from the ones quoted in the case. It is due to the different split ratios that RD and STT had.

 Please, do not answer these questions one by one. Instead, use them only as ways to prime your own analysis. You may then organize and draft your results in whichever way you see fit. If you feel that you have to make any assumptions, please do it by stating them clearly in your report.  I expect the report to be no longer than 9 pages + Excel spreadsheets (if necessary). I would appreciate 12pt font.