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Activist Third Point Urges Shell to Break Into Two Companies

Third Point wants Royal Dutch Shell to break into two companies; one focused on its legacy business and the other focused on renewables.
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Third Point, activist investor Daniel Loeb's investment firm, is urging oil company Royal Dutch Shell  (RDS.A) - Get Royal Dutch Shell Plc Sponsored ADR Class A Report to break up into two different companies in order to retain and attract investors.

Third Point says Shell should consider creating a stand-alone company with its legacy oil business and another company that focuses on renewables and green energy, according to an investor letter viewed by the Wall Street Journal.

Third Point's stake in the company is worth over $500 million, the Journal reported citing anonymous sources, making it one of the company's largest investors. Shell has a market value of nearly $200 billion, according to Wednesday's report. 

Earlier this year, a Dutch court ruled that Shell must cut its emissions by 45% by 2030. The Journal reports that Shell has been more amenable to making changes than its peers, but the company has said it plans to appeal the Dutch court's decision. 

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In September, Shell reported an agreement to sell its Permian basin assets to ConocoPhillips  (COP) - Get ConocoPhillips Report for $9.5 billion in a deal that with transfer all of the company's interest in 225,000 net acres in the Permian basin to ConocoPhillips. 

Top executives from Exxon Mobil  (XOM) - Get Exxon Mobil Corporation Report, BP America  (BP) - Get BP p.l.c. Sponsored ADR Report, Chevron  (CVX) - Get Chevron Corporation Report and Shell are scheduled to testify at a congressional hearing Thursday examining whether the fossil fuel industry led an effort to mislead the public and prevent action to curb climate change. 

Shell President Gretchen Watkins is one of the executives scheduled to address the House Oversight Committee. 

Shell shares on Wednesday closed 2.3% higher at $49.97.