Shell in £47bn bid for BG Group

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Shell in £47bn bid for BG Group

Royal Dutch Shell says it has agreed to buy oil and gas exploration firm BG Group in a deal that values the business at £47bn.

The two firms say they have reached agreement on a cash and shares offer which gives investors a 50% premium on BG Group’s share price on 7 April.

The deal could be one of the biggest of 2015 and is also the first big merger between energy companies in a decade.

It could produce a company with value of more than £200bn ($296bn).

Shell’s £177bn market capitalisation dwarfs that of BG, which now stands at £31bn after a 20% fall in its share price over the past year.

BG Group is the UK’s third largest energy company. It was created in 1997 when British Gas demerged into two separate companies: BG Group and Centrica.

BG Group took control of exploration and production while Centrica took charge of the UK retail business of the former British Gas. BG currently employs about 5,200 people in 24 countries.

Shell said BG Group shareholders would enjoy higher dividends, as it confirmed its intention to pay its existing shareholders $1.88 per ordinary share this year.

The oil giant also said it expected to commence a share buyback programme in 2017 of at least $25bn.

Defensive merger?

The deal comes at a time of uncertainty for oil and gas companies. In the past six months the price of oil has fallen by about 50%. Meanwhile, analysts have warned that investment in North Sea oil exploration has all but dried up, threatening the entire industry.

Last month, the Chancellor, George Osborne, lowered the supplementary corporation tax levied against oil companies that operate in the North Sea.

BG Group warned in February that it would write down the value of its oil and gas assets by nearly £6bn ($9bn) due to the oil price slump.

Similarly, Shell announced in January that it would be cutting spending by nearly £10bn over the next three years.

Source: BBC News

Link: http://tinyurl.com/ltq7vq2

Moving Abroad Checklist

Initial Considerations

Will your partner be travelling with you?

If so, what will they be giving up in your present home and will they be able to continue with their career in your new home? You will need to check whether a separate visa is required for your partner to work or if your visa gives that right. If they are unable to work you will need to decide on the effect on your finances and what alternatives are available to give a fulfilling life (home business, training, voluntary work).

Are you taking family with you?

Moving with family raises many exciting opportunities, but also can create challenges. The HSBC Expat Explorer survey indicates that expat kids can take six months to settle in to their new country (see article). Getting young or even older children to prepare to move and leave their friends and family behind can be a challenge and should be thought through.

The options for education is another area that needs to be thought through.

Moving your child to a new country with a different education system can be a great opportunity to broaden their experience, but if they are close to key exams the timing can make this inadvisable. If you do take your family with you, it is important to decide between joining the local school system or choosing an international school.

Where will you be living?

Whether you will be living in a house or apartment, furnished or unfurnished, these decisions will affect what you need to take with you. The time you are planning to live overseas will also affect whether you should leave your property at home empty, rent it out or sell it. See the article Sell, Store or Ship.