Shell shareholders approve deal to buy UK rival BG

BG Group’s shareholders on Thursday signed off on Royal Dutch Shell’s roughly $US50 billion ($A70bn) takeover bid for the company, paving the way for the completion of the biggest oil and gas deal in over a decade.

A total of 16.92% of shareholders opposed the merger.

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Van Beurden has said repeatedly that the buying BG eventually will be financially beneficial to Shell, in part because of an expected increase in LNG sales, and in part because Shell can save money by reducing redundancies in the two companies.

“When Shell first made an offer for BG, the BG share price was struggling and at that stage it looked to be a valuation that was fair on both parties”. Some of the economics of the transaction “may indeed be stretched in a low oil-price environment” over the next two years, he said.

Over the past 18 months, the company has lost more than half of its market capitalization while its largest peers, ExxonMobil and Chevron, have seen more modest declines.

When completed, the deal will create the world’s largest liquefied natural gas trader, as well as the second-largest non-state energy company, behind Exxon Mobil.

With the acquisition of BG Group, though, it appears Shell is looking more to reconstruct its asset portfolio around a few small themes rather than simply adding size and scale.

For the combined group, Shell in a prospectus previous year said capital investments for 2016 would be around $33 billion, lower than previously forecast by $2 billion, or 5.7 percent. Shell only needed a simple majority of shareholder votes to seal the deal.

“Yes, it is tough when one looks at spot oil prices and near-term futures”, Swiss bank Credit Suisse, a BG investor, has said. Absorbing the British firm’s pre-salt oil production facilities offshore Brazil will make Shell the global leader in deep-water oil fields, giving it a peak 500,000 barrels of oil equivalent a day, according to energy research firm Wood Mackenzie. Shell can also sell off assets with less profit potential to cut costs. Shares of BG erased an earlier loss immediately after the announcement, but have since slipped back into negative territory, down 0.2%.