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Royal Dutch/Shell Group was clearly ready for a fight when it began talking to Barrett Resources Corp. about a merger two weeks ago. Within four business days, Shell made its offer public, filed one lawsuit seeking to neutralize Barrett’s defenses, commenced a hostile takeover bid and filed a second suit to ensure that any court battles will be fought on friendly turf. Shell spokeswoman Stacy Hutchinson in Houston said the principle reason for commencing the litigation was to facilitate the completion of its offer by seeking to invalidate some of Barrett’s anti-takeover defenses. “This is a fairly standard procedure,” she said. Nonetheless, Shell’s moves, coupled with shareholders’ suits seeking to compel Barrett’s board to get the best price possible, have dramatically increased the pressure on the natural gas producer. Shell first contacted Denver-based Barrett on March 1, offering $2.2 billion in cash and debt assumption. On March 7, the day it made its offer for Barrett public, Shell asked Delaware’s Chancery Court to set aside Barrett’s bylaw provisions that limit the rights of its shareholders to vote by written consent. Under Delaware law, shareholders can remove and replace directors without calling and holding a meeting. Shell alleges that Barrett’s bylaw is illegal and an improper barrier to its plan to mount a proxy fight to replace Barrett’s board. Legal experts said that lawsuit is less important now that Barrett announced March 8 that it would consider offers to buy the company, including those from Shell. “When Shell filed the first lawsuit, it wasn’t clear the board was committed to selling the company,” said Lawrence Hamermesh, a professor at Widener University School of Law in Wilmington, Del. “Now that the board is willing to sell the company, it’s less relevant.” In the latest suit, which was filed Monday in U.S. District Court, also in Delaware, Shell claims that Barrett will try to block its $55 a share cash tender offer by claiming that it does not comply with U.S. Securities and Exchange Commission rules. “[The] plaintiffs believe Barrett will seek to delay and defeat the tender offer through efforts including the filing of a meritless suit claiming that public disclosures and filings made by plaintiffs in conjunction with the tender offer and the consent solicitation violate applicable federal securities laws and regulations,” the suit states. Shell is asking the court to declare that its offer complies with the rules and that Barrett may not sue it on any merger-related issue except in the Delaware courts. Hamermesh said the second lawsuit is simply an attempt by Shell to litigate on neutral ground. “This is a forum-seizing effort,” he said. James Edward Maloney and Paul R. Elliott of Baker Botts LLC and Raymond J. DiCamillo, Jesse A. Finkelstein, Daniel A. Dreisbach and Peter B. Ladig of Richards, Layton & Finger are representing Shell in both lawsuits. A Barrett spokesman didn’t return calls seeking comment. Shell launched a tender offer for all Barrett stock Monday after the company’s board rebuffed earlier bids. Barrett issued a statement that day saying it would reply to Shell’s offer within 10 business days. After Shell’s offer was made public, Barrett was hit with several lawsuits beseeching its board to consider alternatives that would maximize shareholder value. In one, also filed in Delaware’s Chancery Court, plaintiff David Beiler charged that Barrett’s directors were “fundamentally motivated to further their own self-interests” and thus violating their fiduciary duty to shareholders by not responding to Shell’s offer. Barrett’s stock closed at $61.25 Wednesday, off 2.7 percent from its 52-week high reached March 9 of $63. Copyright (c)2001 TDD, LLC. All rights reserved.

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