Shell Completes $70 Billion BG Mega Merger

Published at 09:03AM - 15/02/16

Shell completes $70 billion BG mega merger, making Shell the world’s biggest deepwater and LNG producer and alongside giant ExxonMobile in size.

The deal finally went through Monday after almost year of wrangling between shareholders and intense scrutiny by national regulators around the globe.

Shell Completes $70 Billion BG Mega Merger

The Anglo Dutch firm announced the news saying: “Royal Dutch Shell is pleased to announce that the Scheme has become effective and that the entire issued ordinary share capital of BG Group plc is now owned by Shell.”

As part of today’s finalisation, BG Group’s shares have been delisted from the London Stock Exchange at final trading on Friday 12th February after 20 years.

Shell CEO, Ben van Beurden, said: “This is an important moment for Shell. It significantly boosts our reserves and production and will bring a large injection to our cash flow.”

“We have acquired productive oil and gas projects in Brazil and Australia and other key countries. We will now be able to shape a simpler, leaner, more competitive company, focusing on our core expertise in deep water and LNG.”

Shell Sell-off

The merger was first proposed publicly back in April 2015, after months of work by the Shell board behind closed doors.

At the time oil prices were around US$100 a barrel and the offer of almost $70 billion (£35b) looked to be a fair deal for shareholders on both sides.

Fast forward almost a year and the price of oil has slumped by around 70%, making many of Shell’s biggest shareholders question the deal; with some opposing the merger till the last, including savings and investment firm Standard Life.

Even dow the deal is complete, most analysts say that oil needs to return to a minimum of US$60 a barrel to make the merger work.

The new bigger Shell also acknowledges this fact and is now looking to sell off around US$10 billion worth of assets to rebalance its books.

But with a stubbornly low oil price, oil majors globally also trying to balance books by selling off assets; the worry for most of Shell’s shareholders is, will they get a good return for their disposed assets or will it be turn into a fire sale.