Shell to buy BG for $95b
ROYAL Dutch Shell agreed to buy smaller rival BG Group for US$70 billion (S$95 billion) in the first major oil industry merger in more than a decade, closing the gap on market leader United States' ExxonMobil after a plunge in prices.
Shell will pay a mix of cash and shares that values each BG share at around 1,350 pence (S$27), the energy companies said yesterday.
This is a hefty premium of around 52 per cent to the 90-day trading average for Britain's BG, setting the bar high for any potential rival bidders.
The biggest merger this year will give Shell access to BG's multi-billion-dollar operations in Brazil, East Africa, Australia, Kazakhstan and Egypt.
These include some of the world's most ambitious liquefied natural gas projects. Stitched together by Shell chief executive Ben van Beurden and BG chairman Andrew Gould, the deal comes after oil prices have halved since June, putting a premium on access to proven assets rather than costly exploration.
Shell said the deal would boost its proven oil and gas reserves by 25 per cent.
The firm also plans to increase asset sales to US$30 billion between next year and 2018 on the back of the deal.