• Submitted By: iarslan
  • Date Submitted: 04/08/2015 5:43 PM
  • Category: Business
  • Words: 334
  • Page: 2

Royal Dutch Shell on April 8 announced a mega takeover of British rival BG Group worth 47 billion, as the pair consolidate in a sector battered by sliding oil prices.

The deal, approved by the BG board, is worth the equivalent of $70 billion or 64 billion euros.

"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," said a statement issued by the Anglo-Dutch group.

The offer represents a premium of about 50 percent compared with BG's closing share price on Tuesday, costing Shell "approximately 47.0 billion" for its rival, the statement added.

"The result will be a more competitive, stronger company for both sets of shareholders in today's volatile oil price world," Shell chairman Jorma Ollila said in the release.

BG chief executive Helge Lund said the deal "delivers attractive returns to shareholders and has strong strategic logic".

He added: "BG's deep water positions and strengths in exploration... will combine well with Shell's scale, development expertise and financial strength."

Crude oil prices lost more than half their value between last June and the end of January owing to a supply glut fuelled largely by robust output from US shale rock and weak global demand.

That in turn has weighed heavily on energy majors such as Shell, denting their profits and share prices and causing them to cut operating costs.

"The deal between Royal Dutch Shell and BG Group will prompt sector consolidation," noted Marc Kimsey, senior trader at Accendo Markets.

"The decline in oil prices over the past year has battered some stocks which are clearly now looking attractive. In the last year BG shares fell 30 percent... By comparison sector behemoths BP and Royal Dutch Shell have only shed 10 percent over the same...

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