Shell to acquire BG Group for nearly $70 bn

Royal Dutch Shell said in a filing Wednesday with the London Stock Exchange that it had agreed to acquire BG Group for roughly $69.6 billion, a cashandstock deal that would be the biggest energysector merger in more than a decade.

Under the terms of the deal, BG shareholders would receive a mix of cash and Shell stock that would value each BG share at roughly $20. BG shareholders would own 19 percent of the company resulting from the tieup.

Shell said the agreement would allow it to boost proven oil and natural gas reserves by 25 percent and increase production by 20 percent, as well as accelerate its growth strategy.

It also would bolster the AngloDutch multinational’s presence in new natural gas and crude projects, particularly in Australia and Brazil, Shell said.

The deal was struck in a context of low oil prices, which have plunged since last summer and battered the share price of both Shell and BG.

BG Group, Britain’s thirdlargest energy company, employs some 5,200 people in 24 countries and participates in major projects in Brazil and Australia.

It was founded in 1997, when British Gas was split into BG plc (later BG Group) and Centrica.

BG Group’s main business is the exploration and production of crude and natural gas and the production of liquefied natural gas, while Centrica primarily focuses on supplying electricity and gas to businesses and consumers in Britain and North America

“The result will be a more competitive, stronger company for both sets of shareholders in today’s volatile oil price world,” Shell Chairman Jorma Ollila said in a statement Wednesday.

Shell CEO Ben van Beurden, for his part, said the merger was an “incredibly exciting” moment for the company, adding that “it is bold and strategic moves that shape our industry.”