Product details

In April 2015, Shell offered to pay 0.4454 of its B shares and 383 pence in cash for each BG share in a deal valued at USD70 billion. The offer entailed a sizable 50%-plus premium for the BG Group by assuming a USD90/bbl forward oil price. Shell had to seek approval from at least 50% of its shareholders, and BG Group would require the backing of 75% of its shareholders for the deal to go through. On January 8, 2016, Standard Life, a major shareholder in both Royal Dutch Shell plc and BG Group, announced that it would vote No to a merger between Shell and BG at a Shell shareholder meeting to be held on January 27, stating that 'the proposed terms of the acquisition of BG are value-destructive for Shell shareholders.' However, the same investor would vote Yes at a BG shareholder meeting on January 28. A volatile oil market further complicated the M&A decision. With oil prices in the low USD30s/bbl, the market was worried that Shell's view of the future was overoptimistic. Shell top executives needed to make a business case to win shareholder support, which might turn into a case of overpromising and underdelivering to investors.