Shell share price climbs as shareholders approve BG takeover

on Jan 27, 2016
Updated: Oct 21, 2019

Royal Dutch Shell Plc’s (LON:RDSA) shares staged a moderate recovery midday in London today, after the Anglo-Dutch oil major announced that its shareholders had overwhelmingly approved the proposed £35 billion takeover of smaller energy rival BG Group.

Shell’s share price was about 0.19 percent in the red at 1,419.00p as of 13:45 GMT, up from as low as 1,382p earlier in the session.
A little over 83 percent of Shell’s shareholders backed the merger, which would create Britain’s largest public company, barring a highly unlikely stumble at the separate BG Group vote tomorrow.
“I am delighted with the positive shareholder vote and the confidence that shareholders have shown in the strategic logic of the combination of Shell and BG,” Shell’s chief executive Ben van Beurden said. “Our immediate focus is on the successful completion of the transaction and we now await the results of tomorrow’s BG shareholder vote.”

Shell reiterated that it expects the merger to come into effect on February 15.
Many investors and analysts have publicly endorsed the merger, saying that the deal will improve Shell’s standing despite the hefty price amid the oil slump.
“Let’s face it, if I were Shell today, looking at this oil price, I probably wouldn’t have made such a bold move,” a Bernstein research analyst said as quoted by The Wall Street Journal. “But it’s not a bet on the oil price. The value creation is focused on the long term.”
Amongst the notable proponents of the merger are proxy advisers ISS and Glass Lewis, fund managers at Old Mutual Global Investors, Aberdeen Asset Management, Artemis, Allianz Global Investors, Axa Investment Management, Henderson, as well as the sovereign wealth funds of Norway and Qatar.
The only major investor to publicly come out against the acquisition is Standard Life, which branded the deal “value destructive” for Shell, in the context of the depressed oil market. However, the fund said it would support the merger with its BG holding, indicating only minimal opposition to the takeover at the smaller company.
BG’s share price was up 1.02 percent to 1,005.00p as of 14:21 GMT, narrowing the discount to Shell’s offer (0.4454 B shares plus 383p in cash) to less than 0.5 percent.
As of 14:34 GMT, Wednesday, 27 January, Royal Dutch Shell Plc ‘A’ share price is 1,414.50p.