The $53B mega deal - creating the world's biggest trader of liquefied natural gas - came into force today after shareholders waved through the tie-up at the end of January despite slumping oil prices.
"We will now be able to shape a simpler, leaner, more competitive company, focusing on our core expertise in deep water and LNG," CEO Ben Van Beurden declared.
Shell (RDS.A, RDS.B) has said it will cut more than 10K jobs from the combined group and sell $30B of assets over the next three years in order to finance the deal, buy back shares and support dividends.
At a meeting in London, 99.5% of BG shareholders voted in favor of the merger, a day after 83% of Shell's shareholders approved the deal.
BG CEO Helge Lund, who joined BG just weeks before the merger was announced, will step down; Shell exec Huibert Vigeveno, who headed the integration planning in recent months, will become transitional CEO.
Royal Dutch Shell (RDS.A, RDS.B) faces a crucial test this week when its proposed $45B acquisition of BG Group (OTCQX:BRGYY), the British oil and gas producer, will be put to both companies' shareholders.
Shell investors are expected to vote today, and BG's tomorrow.
Some have been skeptical about Shell going ahead with such a big acquisition at a time of falling oil prices, but big stakeholders like the Norway oil fund support the deal.
Thomas notes that Shell needs only 50% of voting shareholders to back the deal; turnout at Shell's annual general meeting tends to be only ~54%, and the figure could approach 45%-50% when considering that perhaps 6% of Shell’s stock has been borrowed by short sellers to balance long arbitrage positions in BG, which could be in the hands of trading desks or other institutions that are less likely to vote.
"Even with a fat spread, the chances of this deal faltering at the final hurdle look slim," Thomas concludes.
Royal Dutch Shell (RDS.A, RDS.B) wins the support of proxy advisory firm ISS for its takeover bid from BG Group (OTCQX:BRGXF, OTCQX:BRGYY), saying the deal has “compelling strategic rationale” and “significant positive economics to be realized within a relatively short time frame.”
Thirty-five of the top 50 shareholders in Shell subscribe to ISS, so a positive recommendation is akin "to a top five shareholder publicly and vocally supporting the transaction,” says Fred Ward at Olivetree Financial.
The spread between the value of BG’s share price and Shell’s offer for each BG share has widened to an unusually high 11%, and a widening spread could mean investors are not confident the deal will be approved; low oil prices and the Chinese market turmoil also may have damaged the deal’s prospects.
Earlier: Shell set to secure investor approval for BG takeover, reports say (Jan. 7)
CFO Simon Henry reportedly is saying Shell will cut capital spending further below the planned $35B for 2016, delay share buybacks and extend scrip dividends, but will keep the size of its dividend unchanged.
Royal Dutch Shell's (RDS.A, RDS.B) takeover of BG Group (OTCQX:BRGYY) may look less attractive after the slide in oil prices but the fact the same investors own nearly half of both firms means the deal is still likely to go through.
According to Reuters data, investors holding about 43% of Shell's shares also hold 53% of BG.
Shareholders will be voting separately on the deal at meetings expected next month.
Chinese and Australian regulators are expected to give the green light to Royal Dutch Shell’s (RDS.A, RDS.B) takeover of BG Group (OTCQX:BRGXF, OTCQX:BRGYY) before Christmas, according to The Telegraph, which reports that Shell CEO Ben van Beurden recently had direct meetings with the president of China’s ministry of commerce.
China was originally believed to be viewing the deal as an opportunity to renegotiate long-term contracts between Shell and the country’s top energy producers, but Cnooc (NYSE:CEO) and China National Petroleum (NYSE:PTR) have pledged broad support in return for continued co-operation with Shell on projects around the world.
Chinese and Australian regulators are expected to give their blessing to Shell's RDS.A, RDS.B £55B takeover of BG Group (OTCQX:BRGYY) before Christmas, leaving the future of the deal resting squarely in shareholders' hands, The Telegraph reports.
The tie-up, which will create Britain's largest public company, has been under mounting scrutiny in recent weeks as investors question whether Shell can justify pushing ahead, with oil prices remaining so suppressed.
As the Chinese regulatory approval process entered its third and final 60-day phase earlier this month, the government asked Shell to review prices in LNG contracts worth tens of billions of dollars annually with China National Petroleum (NYSE:PTR), Cnooc (NYSE:CEO) and Sinopec (NYSE:SNP), according to the report.
Shell officials are said to fear that a revision of the terms of the contracts could create a ripple effect around the world, further eroding gas prices.
The acquisition would be unlikely to substantially lessen competition in the wholesale natural gas market, in either Queensland or eastern Australia, the Australian Competition and Consumer Commission says.
Shell and BG have said the decision was crucial, after having secured approvals from anti-trust authorities in Brazil, the EU and the U.S.; the deal still needs approval from China and Australia's Foreign Investment Review Board to go ahead as planned in early 2016.