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Shell in merger talks with BG Group

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Royal Dutch Shell has confirmed it is in advanced talks to buy UK energy supplier BG Group, in a £47 billion ($69 billion) cash-and-shares offer that highlights how the energy sector is being shaken up by ultra-low energy prices.

The move is designed to boost the British-Dutch group’s growth in liquefied gas and deep water exploration, the company said in a statement released to the markets Wednesday.BG Group has accepted and recommended the bid, whereby its investors will get of 383 pence and just under half a Shell B share, according to newswires.

If the deal goes ahead, BG Group shareholders will own around 19 percent of the combined group. Shell has announced that there is a £750 million cancellation fee if an agreement is not reached.

Oil prices have halved since the middle of 2014 due to a shale oil boom in the U.S. and a decision by Saudi Arabia not to cut production – creating an environment similar to the early 2000s when many super-mergers took place.

Back then, oil major BP acquired rival Amoco and Arco, Exxon bought Mobil and Chevron merged with Texaco.

BG, which has ambitious production growth targets and multi-billion dollar projects in Brazil, East Africa, Australia, Kazakhstan and Egypt, has long been seen as a rare potential acquisition target, including by cash-rich rivals such as Shell or Exxon.

Last week BG poached two officials from Statoil, including Katie Jackson as vice president for global strategy and business development. Jackson had been responsible for mergers and acquisitions at Statoil under Lund’s leadership.

Source: http://citifmonline.com/2015/04/08/shell-in-merger-talks-with-bg-group/#sthash.GlhHHcY4.dpuf

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