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TotalEnergies of France and Shell of Britain, two major European energy firms, are mulling over relocating their stock listings to New York, as they grapple with lower valuations compared with their American counterparts. This would be a significant blow to European exchanges, as both firms rank among the largest listed companies there.
TotalEnergies’ CEO, Patrick Pouyanné, recently made public the company’s consideration to shift its primary share listing from Paris. Likewise, Shell, which no longer considers relocating improbable, has stated that it may contemplate a similar move. However, CEO Wael Sawan said the move is not currently in the cards.
Investor eagerness for higher valuations in America’s energy sector is pushing this possible move. Despite facing resistance, particularly from the French finance minister, Bruno Le Maire, the European companies view the possible shift to US listings as a strategy to strengthen their valuations and compete with their rivals.
According to Giacomo Romeo, an analyst at Jefferies’ investment bank, the price-to-earnings ratios, a valuation metric of Exxon Mobil and Chevron, are at least a third higher than their European rivals. This noteworthy differential forces these companies to consider such relocations, despite the potential political and practical challenges they may confront.
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