Image: Shell copyrights image
Royal Dutch Shell [SHELL] offered 50% premium to buy smaller rival BG Group for $70 bln in the first oil super-merger in over a decade.
In early trading on Wednesday, European shares rose and a rally in energy stocks followed after SHELL agreed to buy BG Group for 47 billion GBP or $70 billion. Shares in Royal Dutch Shell fell 2.8 percent. Currently, shares have showed some gains and are trading at 28.1300.
BG Group plc is a British multinational oil and gas company headquartered in Reading, United Kingdom. Royal Dutch Shell plc, commonly known as Shell, is an Anglo–Dutch multinational oil and gas company headquartered in the Netherlands and incorporated in the United Kingdom.
"The sector has been ripe for consolidation given the bearish outlook for oil prices, and we could see other takeovers in the industry in the coming weeks and months." Saxo Bank trader Andrea Tueni said. The significant fall in oil prices globally has generated a lot of rumor about mergers in the oil and gas industry and BG has often been mentioned as a potential target.
The two firms announced in a joint statement that SHELL would pay a mix of cash and shares that would value each BG share at around 1,350 pence.
Britain's BG had a market capitalisation of $46 billion as of Tuesday close, Shell was worth $202 billion while Exxon, the world's largest oil company by market value, was worth $360 billion. ExxonMobil has been volatile during all of April so far, as well as in March. Shares currently stand at 85.69 and have dropped from Tuesday’s maximum of 86.08.
"We have two very strong portfolios combining globally in deep water and integrated gas," Shell's CEO Ben van Beurden told a news conference in regards to the merger. The merger of BG and Shell is the biggest announced deal worldwide this year.
The deal would give Anglo-Dutch Shell access to BG's multi-billion dollar projects that the British company is running in Brazil, East Africa, Australia, Kazakhstan and Egypt, and would include some of the world's most ambitious liquefied natural gas projects.
MT4 GRAPH: SHELL
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