Oil major Royal Dutch Shell is in talks to buy BG Group, a UK-based oil and gas company, for £47 billion ($69.8 billion) in shares and cash combined. The combination will result in BG Shareholders owning approximately 19% of the combined group.
In their joint statement issued today, BG Group and Shell have said the companies 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.
Under the terms of the Combination, BG Shareholders will be entitled to receive for each BG Share: 383 pence in cash; and 0.4454 Shell B Shares.
BG Group directors have said they consider the financial terms of the combination to be “fair and reasonable and intend unanimously to recommend that BG Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions relating to the Combination at the BG General Meeting.”
Shell has said it expects the combination to accelerate its growth strategy in global LNG and deep water.
Commenting on the combination, Ben van Beurden, CEO of Shell said:
“Bold, strategic moves shape our industry. BG and Shell are a great fit. This transaction fits with our strategy and our read on the industry landscape around us.
“This transaction will be a springboard for a faster rate of portfolio change, particularly in exploration and other long term plays. We will be concentrating on fewer themes, and at a larger scale, to drive profitability and balance risk, and unlock more value from the combined portfolios.”
“Over time, the combination will enhance our free cash flow potential, and our capacity to undertake share buybacks, where I expect to see a substantial increase in pace.”
Helge Lund, the recently appointed CEO of BG Group, arriving from Statoil said: “The offer from Shell delivers attractive returns to shareholders and has strong strategic logic. BG’s deep water positions and strengths in exploration, liquefaction and LNG shipping and marketing will combine well with Shell’s scale, development expertise and financial strength.
“The consolidated business will be strongly placed to develop the growth projects in BG’s portfolio. The transaction will take time to complete, during which my team and I will remain committed to BG and our shareholders, and to safely delivering our 2015 business plan.”