Shell agrees to buy BG Group for $70 Billion

  • Shell (RDS.A, RDS.B)  has agreed to purchase BG Group (OTCPK:BRGXF) for £47B ($70B) in cash and stock.
  • BG shareholders will receive 383 pence in cash and 0.4454 Shell B shares and will end up holding 19% of the combined group.
  • Based on a 90-day trading day average, Shell’s (RDS.A, RDS.B) offer is worth 1,350 pence per BG (OTCPK:BRGXF) share, or a 52% premium to the latter’s price of 890.4 pence.
  • The acquisition will add 25% to Shell’s proven oil and gas reserves and 20% to production, and improve the company’s prospects in new projects, particularly in Australia LNG and Brazil deep water.
  • In addition, Shell plans to increase asset sales to $30B from 2016-2018 – the company said in January that it would sell $5-6B worth of assets per year.
  • Shell intends to pay dividends of $1.88 per ordinary share in 2015 and “at least that amount in 2016.” The company also expects to start a share buyback program of at least $25B from 2017 to 2020.