Dual listings

By THIS IS MONEY
Updated:

 

The Daily Mail's City team take a look the arrangements made when rival companies from different countries merge.

What are they?

At the very basic level it involves companies, with two sets of shareholders sharing ownership of the group's operations. Conventional acquisitions will see one business buy the shares of another, but when a dual-listed structure is set up they agree to share the business while maintaining their stock market listings on separate exchanges in different countries. Reuters and Thomson want to go down this well trodden route.

Why do we have them?

There are often tax reasons for choosing a dual-listing, and once the structure has been put in place there can also be tax obstacles to unravelling the arrangement. Merging two similar, but opposing firms from different countries is not simple. National pride can play a part in going for a dual structure.

Do they work?

Most dual-listed companies will probably say they do work, but there is some evidence to suggest they are too complicated and merely serve to highlight the cultural differences between the constituent parts. Oil major Royal Dutch Shell abandoned its complex corporate dual structure in July 2005, moving to a single London listing following a scandal in which it was found to have inflated its oil and gas reserves. Analysts reckon the structure, also used at Reed Elsevier and Unilever, only adds another layer of bureaucracy and stifles clear decision making.

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