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Shell share price: Anglo-Dutch energy giant in talks to buy BG Group

Tsveta van Son
  • April 8th, 06:42
  • Last Updated: October 21st, 14:28

Royal Dutch Shell Plc (LON:RDSA) is in advanced talks to buy its smaller London-listed peer BG Group (LON:BG) in a deal which could be one of the largest ever M&A transactions in the oil and gas sector. Shell’s share price added 3.43 percent in yesterday’s session to close at 2,094p, slightly outperforming the blue-chip FTSE 100 index which closed 1.88 percent higher at 6,961.77p. BG Group’s share price rallied 6.74 percent to 910.40p.

BG Group confirmed in a short statement last night that it was “in advanced discussions” with the Anglo-Dutch energy major “regarding a possible offer by Shell for BG”. The statement came after the Wall Street Journal revealed the talks earlier, noting that the deal would likely be valued at upward of $50 billion. BG’s market capitalisation stood at nearly £31 billion based on the closing price of its shares yesterday, before the WSJ report.
A Shell spokesman told the BBC that the company was “not making any comment”. The energy giant has until May 5 to make a formal offer.
While BG Group has been earmarked as a potential takeover target given the slump in the oil price and the company’s woes in Egypt, the news came as a surprise, with the company’s new chief executive Helge Lund having taken the helm at the company only in February.
The crude price weakness, however, has already prompted consolidation in the energy sector among some smaller companies, while speculation before Christmas suggested that Shell might make a move on London-listed rival BP Plc (LON:BP). BG Group earlier this year said that it would write down the value of its oil and gas assets by nearly £6 billion, while Shell has said that it would be cutting spending by nearly £10 billion over the next three years.
As of 06:45 BST, Wednesday, 08 April, Royal Dutch Shell Plc ‘A’ share price is 2,094.00p.

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Tsveta van Son
Tsveta van Son is part of Invezz’s journalist team. She has a BA degree in European Studies and a MA degree in Nordic Studies from Sofia University and has also attended the University of Iceland. While she covers a variety of investment news, she is particularly interested in developments in the field of renewable energy.

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