Shell Reaches Agreement to Buy BG Group For £47 Billion

Royal Dutch Shell and BG Group have reached agreement on the terms of a recommended cash and share offer by Shell for the entire capital of BG Group, with Shell offering 383 pence in cash and 0.4454 Shell B Shares for each BG Share.

Shell will put £47 billion on the table in the attempt of strengthening its presence in the LNG sector, and creating a company with a value of more than £200 billion, which would put it right behind ExxonMobil in terms of market capitalisation.  

‘The Boards of Shell and BG are pleased to announce that they have reached agreement on the terms of a recommended cash and share offer to be made by Shell for the entire issued and to be issued share capital of BG’ reads a note released by Shell on Wednesday, adding that Shell expects to commence a share 3-year buyback programme in 2017.

Shell explained that each BG Share is valued at approximately 1,350 pence, with a 52% premium to the 90 trading day volume weighted average price.

‘The Combination will result in BG Shareholders owning approximately 19% of the Combined Group’ Shell wrote. 

Shell explained the decision in light of the strong BG Group’s presence in the global LNG market, also reminding of BG’s deep water assets. 

‘The Combination will add some 25% to Shell’s proved oil and gas reserves2 and 20% to production, each on a 2014 basis, and provide Shell with enhanced positions in competitive new oil and gas projects, particularly in Australia LNG and Brazil deep water.’