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Shell completes merger with BG Group

18 February 2016

Royal Dutch Shell said on February 16 that it had completed its $70 billion merger with UK-based BG Group. The combination is expected to boost Shell’s proved oil and gas reserves by 25% and increase production up by 20%. Shell said in December that restructuring will be needed to achieve the merger’s expected benefits, including $3.5 billion in previously disclosed pre-tax synergies.

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In a press release announcing the completion of the acquisition, Shell CEO Ben van Beurden said, “This is an important moment for Shell. It significantly boosts our reserves and production and will bring a large injection to our cash flow. We have acquired productive oil and gas projects in Brazil and Australia and other key countries. We will now be able to shape a simpler, leaner, more competitive company, focusing on our core expertise in deep water and LNG.”

The deal, first announced in April, involved BG shareholders receiving 383 pence in cash and 0.4454 Shell B shares per BG share, a 52% premium over the company’s closing price on April 7. The BG Group will now be officially delisted from the London Stock Exchange.

In an article in The Times, van Beurden added: “Over time, I expect the fundamentals of energy supply and demand to reassert themselves and the strategic and economic benefits of the deal to fully deliver for shareholders. The deal reinvigorates Shell and will be a springboard for further transformation.”

Shell expects to cut 2,800 globally across the combined companies as part of the restructuring plan. These cuts are in addition to the company’s previously announced plans to reduce its headcount and contractor positions by 7,500 globally.


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