Shell buys British gas company BG Group in mammoth £47BILLION deal
DUTCH energy giant Shell has struck a multi-billion pound deal to buy British gas producer BG Group in what is the biggest merger in 2015.
Royal Dutch Shell has bought the group for £47billion ($70billion).
Reading-based BG Group, which reported a £3.35billion loss in the last quarter of 2014, rushed out a statement this morning after yesterday saying it was in “advanced discussions” about the buyout.
The companies unveiled details of the major merger this morning as the London stock exchange opened.
The investment comes as the oil industry attempts to become more efficient and reduce costs as the price of oil continues to fall.
Shell chief executive Ben van Beurden said: "Bold, strategic moves shape our industry. BG and Shell are a great fit. This transaction fits with our strategy and our read on the industry landscape around us."
Natural gas producer BG Group was created in 1997 after the demerger of British Gas. BG Group took control of production and exploration while Centrica has responsibility for the retail side of the business and operates the British Gas brand.
BG employs 5,200 staff in 24 countries. It has key growth projects in Brazil and Australia.
The deal values the business at 383p a share. It will result in BG shareholders owning around 19 percent of the combined group.
In January Shell pulled out of nearly $10billion planned investment over the next three years. BG Group’s finances have been equally woeful, mainly driven by the dive in global commodity prices.
Shell announced a cull of 300 jobs in its North Sea operations last month in a cost-cutting drive.
Today Mr van Beurden said it remained “committed” to the North Sea.
The merger will increase Shell’s proved oil and gas reserves by 25% and increase production by 20%. It will strengthen Shell’s positions in new gas and oil projects and generate $2.5billion (£1.7billion) a year.
Mr van Beurden also said it would consider investing in Iran if the country opens up.
