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Shell to buy BG in £47 billion deal
- 9 years ago (2015-04-09)
- Junior Isles
Royal Dutch Shell has agreed to buy oil and gas exploration firm BG Group for £47 billion ( about $70 billion) in a deal prompted by falling oil prices.
E-World 2025
The two companies reached an agreement on a cash and shares offer, which gives investors a 50 per cent premium on BG Group’s share price on 7 April. The deal could be one of the biggest of 2015 and could produce a company with a value of more than £200 billion.
The deal comes at a time of uncertainty for oil and gas companies. In the past six months the price of oil has plummeted by about 50 per cent.
BG Group warned in February that it would write down the value of its oil and gas assets by nearly £6 billion due to the oil price slump. Shell announced in January that it would be cutting spending by nearly £10 billion over the next three years.
The companies expect to make annual savings of $2.5 billion following the deal.
Meanwhile, analysts have warned that investment in North Sea oil exploration has almost dried up, threatening the entire industry. But Shell chief executive Ben van Beurden said he remained committed to North Sea oil and expected to invest £4 billion between 2016 and 2018.
Shell said the deal would also add 25 per cent to its proven oil and gas reserves and 20 per cent to production capacity, particularly in Australia’s liquid natural gas market and in deep water oil exploration off the Brazilian coast.
The takeover must clear regulatory hurdles around the world including in Brussels and Australia.