Shell wants to stir up with mega-acquisition energy industry – Reuters Germany

       

– by Kate Holton

       

London (Reuters) – Under pressure from falling oil prices Shell braces the biggest takeover in the energy industry for more than ten years and bought for the equivalent of 64 billion Euro British gas producer BG.

       

The Directors of both companies approved the transaction for Wednesday. The Anglo-Dutch energy giant wants to ascend to the world’s leading suppliers of LPG and reduce the gap to the US oil world leader ExxonMobil. Because of the large presence of both companies in the European Union, Australia, Brazil and China Shell Chairman Ben van Beurden expects, however, with intense negotiations with the competition watchdogs.

       

This is the first major merger in the sector since the times around the turn of the millennium, when the energy companies were in similar difficulties because of falling prices. At that time, the British oil giant BP bought Amoco and Arco American rivals. Exxon took over Mobil, and Chevron merged with Texaco. Now there is a similar pressure. Since last summer, crude oil prices have halved. The reason is the high flow rates, for which there are not enough buyers in the face of a sluggish global economy, as well as the shale gas boom in the United States. Also, the gas price, based on the price of oil has fallen sharply in the wake of that.

        
       

BG IS SHELL SURCHARGE OF 50 PERCENT VALUE

       

To counter is Royal Dutch Shell is the takeover of the BG Group, which emerged from the former British Gas Group, cost a premium of about 50 percent on the average BG share price during the past three months. Is paid in cash and stock. “We have examined a number of ways, but BG was always high on our list,” said van Beurden. The merger now unite two companies with a “strong portfolio” with oil and gas production on the high seas and the delivery infrastructure. Experts see it similarly: “The deal is expected to be awarded shell fit,” the analysts wrote from the brokerage firm Jefferies. However, investors still need to be convinced and asked for patience because the debt reduction probably should in future have a greater priority than the distribution to shareholders.

       

Shell covered with BG-billion dollar projects in Brazil, East Africa, Australia, Kazakhstan and Egypt in the hands. Among them are some of the world’s most ambitious projects of liquefied natural gas is considered promising business in the industry. Especially European customers hope in the face of Ukraine conflict which reduced dependence on the natural gas supplier in Russia, which is based on gigantic pipeline networks. LPG can, however, be with ships, train and transported by truck and thus shake up the market.

       

The acquisition will increase by 25 percent the oil and gas reserves of Shell. Management establishes the BG-purchase but also savings: Per year, he will bring synergies of around 3.4 billion euros before taxes. The mega merger will also consider the sale of additional business lines by themselves: Shell announced to divest from 2016 to 2018 of the Group and equity interests in the volume of almost 28 billion euros. In January, the oil giant had estimated the sum of the projected sales per year, with about 4.5 to 5.5 billion euros. Continued …