BG Group share price: Terms on Shell’s cash and share bid agreed

The Boards of Royal Dutch Shell (LON:RDSA) and BG Group (LON:BG) announced today that they had reached agreement on the terms of a recommended cash and share offer to be made by Shell for the entire issued and to be issued share capital of BG.

**Highlights from the companies’ joint statement:**
Under the terms of the Combination, BG Shareholders will be entitled to receive: For each BG Share: 383 pence in cash; and 0.4454 Shell B Shares[1]
Based on the 90 trading day volume weighted average price of 2,170.3 pence per Shell B Share on 7 April 2015 (being the last Business Day before the date of this Announcement), the terms of the Combination represent: a value of approximately 1,350 pence per BG Share; and a premium of approximately 52% to the 90 trading day volume weighted average price of 890.4 pence per BG Share on 7 April 2015.
Based on the Closing Price of 2,208.5 pence per Shell B Share on 7 April 2015 (being the last Business Day before the date of this Announcement), the terms of the Combination represent: a value of approximately 1,367 pence per BG Share; a premium of approximately 50% to the Closing Price of 910.4 pence per BG Share on 7 April 2015; and a value of approximately £47.0 billion for BG’s entire issued and to be issued share capital.
The Combination will result in BG Shareholders owning approximately 19% of the Combined Group. Shell expects the Combination to accelerate its growth strategy in global LNG and deep water. The Combination will add some 25% to Shell’s proved oil and gas reserves[2] and 20% 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. The Combination has the potential to unlock further value for both sets of shareholders from the combined portfolio. An enhanced set of upstream positions will be a springboard to high-grade the Combined Group’s longer term portfolio, increase asset sales and reduce capital investment, thereby enhancing the Combined Group’s capacity to pay dividends and undertake share buybacks.
Shell expects the Combination to generate pre‑tax synergies of approximately $2.5 billion per annum (which have been reported on) and has also identified further significant opportunities. In the near term, BG Shareholders will benefit from the dividends enjoyed by Shell Shareholders.[3] Shell today confirms its intention to pay dividends of $1.88 per ordinary share in 2015 and at least that amount in 2016. In the medium term, all shareholders will benefit from the potential for enhanced cash flow and a continued drive to grow returns and enhance capital efficiency from the combined portfolio.
Shell expects to commence a share buyback programme in 2017 of at least $25 billion for the period 2017 to 2020.[4] Shell expects this programme to offset the shares issued under the Shell scrip dividend programme and to significantly reduce the equity issued in connection with the Combination.
**More to follow…**
As of 07:21 BST, Wednesday, 08 April, Royal Dutch Shell Plc ‘A’ share price is 2,094.00p.