The Boards of Royal Dutch Shell plc and BG Group plc announced yesterday that they “have reached agreement on the terms of a recommended cash and share offer to be made by Royal Dutch Shell plc for the entire issued and to be issued share capital of BG Group plc.” The deal is worth around £47 billion ($69.6 billion) and could one of the biggest done in 2015, creating a company worth more than £200 billion ($296 billion).
BG Group, formed in 1997 when British Gas span off its UK retail business as Centrica, is the UK's third largest energy company, and currently employs about 5,200 people in 24 countries. BG remained in control of exploration and today has a market cap of some £31 billion.
According to the statement from Shell, the merger will result in BG shareholders owning approximately 19 percent of the combined group. Shell anticipates that the company will now be able to accelerate its growth strategy in global LNG and deep water. The acquisition will add some 25 percent to Shell’s proved oil and gas reserves and 20 percent to production (each on a 2014 basis), and provide Shell with enhanced positions in competitive new oil and gas projects, particularly in Australia LNG and Brazil deep water.