MOSOCW (MRC) - Royal Dutch Shell (RDSa.L) agreed to buy smaller rival BG Group (BG.L) for 47 bn pounds (USD70 billion) in the first major energy industry merger in more than a decade, closing the gap on market leader U.S. Exxon Mobil after a plunge in prices, said Reuters.
Anglo-Dutch Shell will pay a mix of cash and shares that values each BG share at around 1,350 pence, the companies said. This is a hefty premium of around 52 percent to the 90-day trading average for BG, setting the bar high for any potential counter-bid by a company such as Exxon, which has said it would also use the downturn in oil markets to expand.
The third-biggest oil and gas deal ever by enterprise value will bring Shell assets in Brazil, East Africa, Australia, Kazakhstan and Egypt. BG has some of the world's most ambitious projects in liquefied natural gas (LNG), where demand is growing as consumers turn away from more polluting fuels such as coal.
Shell is already the world's leading LNG company and it would get BG's capacity in LNG logistics - complex infrastructure that includes terminals, pipelines, specialized tankers, rigs, super coolers, regasification facilities and storage points.
As MRC informed earlier, Royal Dutch Shell has completed a revamp and upgrade of its Singapore ethane cracker. The project increased production for the 800,000-tpy ethylene plant on Bukom Island by 20%. The ethylene and olefins unit is also integrated with Shell’s 500,000-bpd refinery.
Britain's BG had a market capitalization of USD46 billion at Tuesday's close, Shell was worth USD202 billion and Exxon, the world's largest energy company by market value, was worth USD360 billion.
Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
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