UK BG Group Shareholders Approve Takeover
BG shareholders approved the proposal to be bought by Anglo-Dutch major Shell at the shareholders' meeting January 28 by a vote that was almost unanimous – over 99% of the counting votes cast. The day before, Shell's shareholders gave their approval, with 83% of the votes being in favour.
It was the first major takeover upstream since the wave of mergers in the early 2000s, from which Shell remained on the sidelines.
Welcoming the BG vote, Shell CEO Ben van Beurden said 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 to delivering the benefits of the combination as quickly as possible following completion.”
"Following today’s approval of the scheme and the special resolution by BG shareholders, completion of the combination remains subject to the satisfaction or waiver of the remaining conditions set out in the scheme document, including the court sanctioning the scheme at the court hearing," BG said. The hearing is set for February 11 and, subject to sanction, the takeover will become effective February 15.
The deal shrinks competition in LNG supply by merging two of the biggest traders of equity cargoes free from destination clauses; and consolidates deepwater production off Brazil. Shell also has coalbed methane resources in Queensland that could now be directed towards BG's pioneering CBM-LNG export terminals.
When the deal was announced last April the oil price still had much further to fall, but the share component of the deal has softened the impact of the weaker oil price, both companies being worth much less now than when the terms were agreed. But the longer the oil price remains low, the longer the deal will take to pay off, and Shell's shareholders will be considering their future commitment and watching with interest to see what prices the necessary disposals will fetch. Midstream and downstream sales might be the first candidates, given the upstream problems.