Royal Dutch Shell has made a $94 billion offer to acquire BG Group, which would establish the company as the global super power in LNG.
The Boards of both companies worked together to establish the terms of the deal, which has now been recommended to shareholders.
Jorma Ollila, Chairman of Shell said, “This is an important transaction for Shell, accelerating the delivery of our strategy for shareholders. The result will be a more competitive, stronger company for both sets of shareholders in today’s volatile oil price world.”
If the sale goes ahead, the new company will be valued at around $387 billion and its assets will include the QCLNG Plant in Gladstone, Queensland.
Commenting on the deal BG Chairman Andrew Gould said:
“This offer represents an attractive return for BG shareholders. BG has a strong portfolio of operations including growth assets in Australia and Brazil and a highly competitive LNG business, as well as an enviable track record of exploration success.”
“The BG Board remains confident in BG’s long-term prospects under the leadership of Helge Lund. Shell’s offer, however, allows us to accelerate and de-risk the delivery of this value. The structure of the offer will provide BG shareholders with an attractive premium and a substantial cash return as well as enabling them, if they wish, to participate in the benefits of the combination through the share component. For these reasons, the BG Board recommends the offer.”
The strategic priority of deep water and LNG shared by both BG and Shell, could also potentially generate $15-20 billion of cash flow from operations per annum if the groups were to combine. Long-term positions could also add a further $10 billion of cash flow from operations per annum.