London: Royal Dutch Shell agreed to buy smaller rival BG Group for $70 billion in the first oil super-merger in more than a decade to close the gap with the world’s largest oil firm US ExxonMobil.<\/p>\n
In a joint statement, the two firms said Shell would pay a mix of cash and shares that would value each BG share at around 1,350 pence. It said this represented a premium of around 52% to the 90-day trading average.<\/p>\n
Britain’s BG had a market capitalisation of $46 billion as of Tuesday close, Shell was worth $202 billion while Exxon, the world’s largest oil company by market value, was worth $360 billion.<\/p>\n
“We have two very strong portfolios combining globally in deep water and integrated gas,” Shell’s CEO Ben van Beurden told a news conference.<\/p>\n
The deal would give Anglo-Dutch Shell access to BG’s multi-billion dollar projects in Brazil, East Africa, Australia, Kazakhstan and Egypt, including some of the world’s most ambitious liquefied natural gas (LNG) projects.<\/p>\n
Van Beurden said the presence of two large firms in Australia, Brazil and China and the European Union might require a detailed conversation with anti-trust authorities.<\/p>\n
The collapse in global oil prices has sparked much speculation about mergers in the industry and BG has often been cited as a potential target.<\/p>\n
The merger is the biggest announced deal globally this year.<\/p>\n
BG shares have tumbled nearly 28% since mid-June, when the slump in global oil prices started. That compares with a 17.2% decline in the FTSE All Share Oil and Gas Index and a 3.3% fall for Shell’s Amsterdam-listed shares.<\/p>\n
In early trade in London, BG’s shares had risen 42%, while Shell’s were down 1.8%.<\/p>\n
MEGA MERGER<\/p>\n
The halving in crude prices on the back of a shale oil boom in the United States and a decision by Saudi Arabia not to cut production has created an environment similar to the early 2000s, when many large mergers took place.<\/p>\n
Back then, oil major BP acquired rival Amoco and Arco, Exxon bought Mobil and Chevron merged with Texaco.<\/p>\n
The deal, which should generate pretax synergies of around 2.5 billion pounds per year, will result in BG shareholders owning around 19% of the combined group.<\/p>\n
The two groups said Shell would pay a dividend of $1.88 per ordinary share in 2015 and at least the same amount in 2016.<\/p>\n
Shell also expects to start a share buyback programme in 2017 of at least $25 billion from 2017 to 2020.<\/p>\n
Shell said the deal would boost its proven oil and gas reserves by 25%. The firm also plans to increase asset sales to $30 billion between 2016-2018 on the back of the deal.<\/p>\n","protected":false},"excerpt":{"rendered":"
London: Royal Dutch Shell agreed to buy smaller rival BG Group for $70 billion in the first oil super-merger in more than a decade to close the gap with the world’s largest oil firm US ExxonMobil. In a joint statement, the two firms said Shell would pay a mix of cash and shares that would value each BG share at around 1,350 pence. It said this represented a premium of around 52% to the 90-day trading average. Britain’s BG had a market capitalisation of $46 billion as of Tuesday close, Shell was worth $202 billion while Exxon, the world’s largest […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[133],"tags":[],"class_list":["post-10088","post","type-post","status-publish","format-standard","hentry","category-oil-gas"],"acf":[],"_links":{"self":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/10088","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/comments?post=10088"}],"version-history":[{"count":0,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/10088\/revisions"}],"wp:attachment":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/media?parent=10088"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/categories?post=10088"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/tags?post=10088"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}