BREAKING: Shell-BG merger approved

BG Group’s shareholders on Thursday approved the multi-billion merger with Hague-based energy giant Shell, creating the world’s largest LNG company. This is Shell’s biggest ever acquisition and the largest oil and gas deal since Exxon bought Mobil in 1999.

According to a statement by BG, 99.53 percent of shareholders of the UK-based company voted in favour of this historic deal while 0.47 of BG’s shareholders were against.

Shell’s shareholders approved the deal on Wednesday with 83.08 percent votes in favor of the merger while 16.92 percent voted against the combination.

Both Shell and BG needed 50 percent shareholder approval plus one vote to approve the combination. BG also required votes representing 75 percent of the total value of its shares in favour.

The transaction is expected to complete on February 15, subject to the satisfaction or waiver of certain customary conditions, “including the sanction of the scheme of arrangement to implement the combination by the High Court of Justice“, Shell said in a statement on Thursday.

Commenting on the BG shareholder vote, Ben van Beurden, CEO of Shell, said: “I am very pleased that BG shareholders have voted in favour of the combination and look forward to welcoming them onto our register when the transaction closes. BG adds attractive deep water and integrated gas positions and will act as a catalyst for accelerating the re-shaping of our business. We now look forward delivering the benefits of the combination as quickly as possible following completion.”

LNG colossus

Shell’s Integrated Gas business, which has grown into a business that generated over the last three years on average $11 billion of cash flow per year from around $2 billion in 2009, will be established as a standalone organisation after the merger, Shell said.

The combined group’s equity LNG capacity is expected to be 44 mtpa in 2018, compared to Shell’s 26 mtpa in 2014.

The merger will also create the world’s largest LNG shipping operator, managing and operating around 70 vessels that carry chilled gas.

Merger value and oil price

Since the proposed merger was announced last April, the price of crude oil has continued its descent and is more than 40 percent lower than when the deal was announced.

The deal is currently priced at around $50 billion, down $20 billion from the value in April.

Job cuts

Shell’s CEO Ben van Beurden recently said that the Hague-based giant expects a reduction of 10,000 staff after completion of the proposed merger with BG.

Synergies from the BG combination “will include a reduction of some 10,000 staff and direct contractor positions in 2015-16 across both companies, as streamlining and integration of the two companies continue,” van Beurden said.

According to the CEO, capital investment for Shell and BG combined in 2016 is currently expected to be $33 billion, around a 45% reduction from combined spending, which peaked in 2013.

LNG World News poll

LNG World News recently created two polls for our readers to give their opinion on how they think Shell’s and BG shareholders will vote on the proposed merger.

The first poll revealed that 75.2 percent of Shell’s shareholders voted to approve the deal, while 24.8 percent of the shareholders said no to the combination.

According to the results from the second poll, 79 percent of BG’s shareholders said yes to the merger, while 21 percent of the shareholders voted against the deal.


LNG World News Staff