Shell share price: Top investor backs merger with BG Group

By: Tsveta van Son
Tsveta van Son
Tsveta van Son is part of Invezz’s journalist team. She has a BA degree in European Studies and a… read more.
on Jan 22, 2016
Updated: Mar 11, 2020

Royal Dutch Shell’s (LON:RDSA) fifth-biggest shareholder has voiced support for the group’s planned £47-billion takeover of smaller London-listed peer BG Group (LON:BG), The Telegraph has reported. The news comes less than a week before shareholders in both companies will have to vote on the landmark deal.

Shell’s share price has jumped in today’s session, having added 4.41 percent to 1,374.50p, and outperforming the blue-chip FTSE 100 index which currently stands 1.76 percent higher at 5,875.13 points. The shares have benefitted from a bounce in the oil price off multi-year lows, which has also sent BG Group’s share price 3.09 percent higher at 961.50p.
The Telegraph reported yesterday that Shell’s fifth biggest investor, Norges Bank Investment Management, had said that it would vote in favour of the plan at the shareholder meeting next week.

“In an environment of low oil prices, we believe the companies will stand stronger together,” a spokeswoman for the $790-billion fund told the newspaper. Norges Bank joins a growing group of shareholders which have signalled that they will back the tie-up. Fund houses including Kames and Rathbone have also voiced support for the merger despite concerns that the ongoing oil price weakness could deepen the Anglo-Dutch major’s debt.
“We do not assess the value of the deal against today’s low spot oil price: this is a long-term deal,” a spokesman for Kames said, as quoted by The Telegraph, adding that BG’s assets “will strengthen Shell’s portfolio” and accelerate the oil major’s long-term drive towards its liquefied natural gas business and deepwater activities.
Analysts at Jefferies also flagged benefits from the upcoming tie-up this week, forecasting that the enlarged group would “have one of the most resilient cash cycles in the sector”.
Shell’s shareholder vote is scheduled for Wednesday, while BG Group’s investors will vote on the tie-up on Thursday.
As of 09:08 GMT, Friday, 22 January, Royal Dutch Shell Plc ‘A’ share price is 1,360.75p.

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