Oil and gas giant Shell has made a massive takeover bid for BG Group, which will include the company’s QCLNG plant on Curtis Island.
Shell has offered to pay $94 billion in cash and shares which will give BG Group’s shareholders a 50 per cent premium on its last closing price.
If the deal goes ahead, the new company would be valued at around $387 billion, and means Shell would become the biggest player in the global LNG market, with sales twice that of its nearest competitors Chevron and Exxon Mobil.
“The combination will add some 25 per cent to Shell’s proved oil and gas reserves and 20 per cent to production, each on a 2014 basis, and provide Shell with enhanced positions in competitive new oil and gas projects, particularly in Australia LNG and Brazil deep water,” the company said.
Shell said it also expects the combination to generate pre-tax synergies of approximately $2.5 billion per annum.
The deal will see Shell take control of BG’s Australian assets which includes the $20 billion QCLNG plant on Curtis Island.
Commenting on the announcement, Shell’s CEO Ben van Beurden said the two companies were a great fit.
“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,” he said.
“BG will accelerate Shell’s financial growth strategy, particularly in deep water and liquefied natural gas: two of Shell's growth priorities and areas where the company is already one of the industry leaders. Furthermore, the addition of BG's competitive natural gas positions makes strategic sense, ahead of the long-term growth in demand we see for this cleaner-burning fuel.
“This transaction will be a springboard for a faster rate of portfolio change, particularly in exploration and other long term plays. We will be concentrating on fewer themes, and at a larger scale, to drive profitability and balance risk, and unlock more value from the combined portfolios.
“Over time, the combination will enhance our free cash flow potential, and our capacity to undertake share buybacks, where I expect to see a substantial increase in pace.”