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Shell buying BG Group for $70 billion

Staff writer |
Royal Dutch Shell agreed to buy BG Group for $70 billion. Shell will pay a mix of cash and shares that values each BG share at around 1,350 pence ($20), both companies said.

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This is a hefty premium of around 52 percent to the 90-day trading average for BG. The biggest merger this year will give Shell access to BG's multi-billion-dollar operations in Brazil, East Africa, Australia, Kazakhstan and Egypt. These include some of the world's most ambitious liquefied natural gas (LNG) projects.

"We have been scanning quite a few opportunities, with BG always being at the top of the list of the prospects to combine with," Shell CEO Van Beurden told a conference call.

"We have two very strong portfolios combining globally in deep water and integrated gas".

Shell said the deal would boost its proven oil and gas reserves by 25 percent. The firm also plans to increase asset sales to $30 billion between 2016-2018 on the back of the deal.

BG had a market capitalization of $46 billion as of Tuesday close, Shell was worth $202 billion while Exxon, the world's largest oil company by market value, was worth $360 billion.


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