LONDON: Oil giant Royal Dutch Shell has agreed a £47bn takeover of gas group BG in one of the biggest deals seen in the oil and gas sector in the last 20 years. It will create a company worth more than £200bn.
BG confirmed on Wednesday that it was offering a cash and shares deal worth £13.50 a share – a 50% premium on BG’s market value on Tuesday night when news of the deal first leaked.
BG’s share price soared 42% to £13 on the news, while Shell shares fell 4% to £21.16. Shares in other energy stocks rose, with rival BP climbing 4.3% to 475p amid speculation that it could become the next target. BP is valued at around £83bn.
Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said: “The deal could prompt other companies who have been running the slide rule over potential targets to make their move.”
Oil executives have been predicting a round of consolidation among oil and gas companies as a result of the sharp slide in oil prices, as was witnessed in the 1990s, when BP and Exxon both snapped up rivals.
BG’s chairman Andrew Gould described Shell’s offer as “compelling”. The group’s new chief executive, Helge Lund, who joined the company in February, is expected to leave once the deal goes through. Following the recent controversy over his £25m pay deal, Lund now looks to be in line for a multi-million pound departure package after just two months with the group.
Ben van Beurden, chief executive 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.” He added: “BG has always been on the top of [our] list.”
