Shell offers $70B for BG Group

Shell offers $70B for BG Group

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Royal Dutch Shell agreed to acquire U.K.-based BG Group in one of the largest deals ever in the oil and gas sector. The reported $70 billion transaction would be the industry’s third-largest on record, uniting Shell’s $202 billion market value with BG’s $46 billion value. Although merger activity in the oil sector was relatively light in the first quarter of 2015, the global slide in oil prices could provide opportunities for large energy companies to seek out proven oil and gas assets. Earlier this year, the crude price downturn led BG to write down the value of its energy assets by nearly $9 billion. Shell CEO Ben van Beurden, meanwhile, said the company looked at a number of recent opportunities and that BG was at “the top of the list of the prospects to combine with.”

In addition to closing the gap on ExxonMobil -the world’s largest energy company by market value -the deal would enable consolidation and further cost cutting, increase Shell’s oil and gas reserves by 25 percent and unite its leading liquefied natural gas operations with BG’s LNG infrastructure. “LNG is a very important component of this,” van Beurden said. “The whole idea is that we turn the company on the back of this deal into a much more focused company, very, very strong in gas and very, very strong in deep water.” The deal is pending approval from shareholders and regulators and is expected to close early next year.