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Real-Time news about BG Grp. (London Stock Exchange): 0 recent articles
|spob: " Selling RDSB at the right time and transferring all into BG will net me an easy 12.5% with another 9% div to come over the next year. 21.5% for this year alone. "
Can you just tell us what the shell share price will be in 12 months|
|jammyjambo: I own BG Group shares and have to make the decision of what to do with them.
I'm no pro investor which may explain my confusion. But why would I not just sell my shares now which are approx 1015 each rather than take the offer next week of 383p per share + [0.4454 * (RDSB - divs)?
Or am I missing the point? Is the 383 on top of the share price on the day of the decision?
|zyzzyva: all deals have a maximum value that they would work at, though everyone will have their own opinion on what that is. what price would the deal be at if it was announced as at today? certainly not $70bn. that theoretical price might be just 300p a share plus the $10bn net debt. E&P assets have crashed and the Brazilian assets only have option value. check out the trouble Petrobras is in.
the BG share price is an illusion, as it is tied to the deal terms. what would the BG share price be now if no deal had been announced. someone posted that the last time oil prices were at this level, BG was at 280p. that matches my thinking that BG could fall to £2 if the deal was pulled.|
|whiskeyinthejar: He talked about the oil price because he was asked! Its going to come up isn't it!
But article is clear - he said merger is “not a bet on the oil price”.
Going back to your other comment- I'm not spinning it I'm putting it simply.
You or Spob or whoever can disagree or put me right, but I don't think I've written anything unreasonable.
The Oz Gas facilities are an asset which I say is worth £13 Billion because that's the facilities cost to build. You don't have to agree they are worth that, but if you don't have a reason to disagree then you've lost the argument.
I actually suggest the Oz Gas LNG facilities are worth more to Shell, because Shell can use them to develop their current Oz assets.
Anyway, the remainder of bid is new Shell shares in return for the existing BG shares. So Shell shareholders get diluted by 20%, which in return Shell increases proven reserves by 25% and increases in production by 20%. Again you can say, actually Shell has refinery assets etc. so exchange is unfair. Or you can say BG are increasing production exponentially and gas is more valuable than oil, so deal undervalues BG. That's your call, but in terms of exchanging dilution for bg reserves thats the deal simply put.
However, if this deal wasn't happening, because BG is moving from investment phase to more of a production phase, BG share price would imo outperform Shell and the sector over the next year.
Oz Gas project is now on stream and ramping up, Brazil has ramped up production and so unlike last few years BG have free cash flow. Depending on prices this ought to mean a growing dividend.
Anyway, BG shareprice has fell from over £15 to £9 because Oz project overran, all the cash generated was being soaked into the massive gas project and pessimism over gas price. Pessimism over gas persists, but project is complete now, so Shell are are getting BG rather cheaply imo.
But you don't get to buy a premium company without paying a premium to current shareprice. That shouldn't concern Shell holders however, as BG is obviously worth more as part of Shell than as a standalone company because of synergies and risks being spread (Shell identified $3.5 billion of cost saving synergies etc.)|
|enturner: Value used for conversion of RDSB shares received to cash will be the opening price for RDSB on 15th February under the current agreement. Your £3.83 per BG. share is fixed, but if you elect to receive all in cash then the RDSB shares you receive under the offer (0.4454 RDSB for every BG. share) would be converted to cash based on the opening RDSB price on the 15th Feb. You won't know your total until that day but you will have to elect (other than the default position) beforehand. I believe 10th. The risk is that the market will be diluted, and under downward pressure, on the day but the cash leaves you the option to buy back in at a lower level shortly afterwards. You spend a little extra on Stamp and broker fees but at least you hit the button on an agreed price beforehand rather than leaving it up to the market makers on the 15th. I suspect we'll see a little dip 16th-19th when dilution/offloading will occur and a 100% cash option could be converted into RDSB at optimum buying levels. An all Share option however could see you saving stamp duty and broker fees whilst buying RDSB at an average of low 1200s. The default option gives you the option somewhere in the middle. Once again you make your own mind up as no one ever really knows how the market will react. Best of luck and hope this helps. If anyone sees it differently then I welcome a response. E|
|whoppy: I was thinking of converting the 3.83 cash into ShellB shares. Shell will be paying a dividend of $1.88 in 2016, approx £1.25. Thought having the extra ShellB shares was worth it. Only risk is don't know what the ShellB share price will be or what it will do in future, but seeing as we're getting ShellB shares anyway, might as well convert the cash.|
|karateboy: Closed at the highest of the day. With current RDSB share price , BG has further to go to close the gap between the current price and the offer price. I think anther 8%.|
|shalder: If you do the maths then buying BG. @ say 930 and holding to completion of deal is equivalent to buying RDSB @ 1228 xd, versus current market price of 1469, i.e. a discount of above 16%. it then comes down to whether you are confident the deal will go ahead and that the terms are not renegotiated (which requires inter alia that both sets of shareholders approve the deal next month). If the deal is aborted then the BG. share price will lose its support and likely fall substantially. You pays your money....|
|spob: Shell strikes £47bn agreed takeover of BG
8 April 2015
Royal Dutch Shell is to buy BG Group in the energy industry’s biggest deal in more than a decade, paying £47bn ($70bn) for the equity of its rival.
The transaction is the oil sector’s most dramatic response so far to the slide in crude prices, which have slumped 50 per cent since last June, and could usher in further consolidation across the industry as companies scramble to cut costs.
On this story
Lex Shell and BG — shelling out
Shell chief pulls off audacious move
Nick Butler Who’s next in energy M&A?
Analysis ExxonMobil keen to join oil M&A party
Lombard BG’s Lund joins the footnote guys
On this topic
Shell and BG deal — what the analysts say
Five questions for Shell over BG deal
Fast FT BG shares rise 42% after Shell offer
Shell in talks with BG over £46bn deal
The deal will increase Shell’s oil and gas reserves by a quarter and its production by 20 per cent. Analysts say it could put the company on track to surpass ExxonMobil as the world’s largest non-state oil company by output.
Acquiring BG will also turn Shell into the largest foreign oil company in Brazil, one of the world’s richest and most exciting oil provinces, and strengthen its position as the largest producer of liquefied natural gas among the global majors.
BG shares were 28 per cent higher £11.69 in afternoon trading in London. Shell’s B shares were down almost 8 per cent at £20.33 with some analysts suggesting Shell may have paid a steep price for its rival.
However, Ben van Beurden, Shell’s chief executive, said the deal represented an “incredibly exciting moment” for the Anglo-Dutch major, which has struggled in recent years to boost production and increase its reserves.
He said Shell had long had its eye on BG but the recent fall in the oil price, which has dragged down the valuations of all the main energy groups, made a deal ”very compelling from a value perspective”. BG’s share price had fallen 28 per cent between last June and the announcement of Wednesday’s deal.
Shell will pay BG shareholders 383p a share in cash, plus 0.4454 B shares in Shell. That is equivalent to £13.50p a BG share and values BG’s equity at about £47bn. It is a premium of about 50 per cent based on 90-day trading volumes.
BG recorded net debt of £8bn at its last results, putting a total enterprise value on the deal of almost £55bn.
Some Shell shareholders cautioned that by acquiring BG, Shell would be taking on some potentially troubled assets, particularly in Brazil and Australia, where projects have been hit by cost overruns and delays.
Matthew Beesley, head of global equities at Henderson Global Investors, which owns shares in Shell and BG, said: “Shell is taking on more risk and in issuing more shares and paying out cash to BG shareholders.
“As a result, their balance sheet will become more stretched. This potentially puts some strain on [Shell’s] dividend as they redirect cash flows to paying down debt ahead of growing the dividend.”
However, Michael Clark, portfolio manager of Fidelity MoneyBuilder Dividend Fund, a big investor in Shell and BG, stressed it was a good deal for both sets of shareholders. “There is no danger that Shell will change its dividend policy,” he said. Indeed, the company confirmed it would maintain its current payout of $1.88 per ordinary share in 2015 and pay “at least that amount” in 2016.
Since the price of crude began to slide last year, expectations have been high that the oil sector could see a repetition of the mergers and acquisitions fever that reconfigured the industry in the late 1990s — another period of low oil prices — that created the current crop of big oil companies such as BP, Chevron and ExxonMobil.
Some significant deals have already materialised since oil began to drop. Halliburton, the oil services group, recently bought rival Baker Hughes for $35bn and Repsol of Spain late last year acquired Talisman Energy of Canada for $8.3bn. Rex Tillerson, chief executive of ExxonMobil, said last month the company could be open to a large deal.
Mr van Beurden said the acquisition of BG would deliver a significant uplift in free cash flow, which would enable Shell to launch a $25bn share buyback programme in the 2017-20 time period. The combined company would also divest $30bn of assets over 2016-18. That comes on top of the $15bn worth of assets Shell disposed of in 2014.
Shell is paying a lot for BG, on the assumption of higher oil prices
The fact that the offer is in cash and shares, Mr van Beurden said, meant BG shareholders will remain exposed to the assets “and all the upside when oil prices go up again”.
Shell was advised by Bank of America Merrill Lynch. BG was advised by Goldman Sachs and Robey Warshaw.
Mr van Beurden first broached the deal in a March 15 call to Andrew Gould, BG’s chairman, who used to be chief executive of oil services company Schlumberger. “I called [him] up and we had a very good and constructive discussion,” the Shell CEO said.
Combining with BG chimes in with Shell’s long-held focus on two business segments — “integrated gas”, which involves producing, processing and exporting natural gas, and deepwater oil and gas production. Mr van Beurden said the BG deal would be a “much enlarged version of what we did with Repsol”, the Spanish oil company that sold its LNG business to Shell in 2013.
Shell said it would pay down debt from 2016 when the deal is expected to become accretive to cash flow. It said it would be “mildly accretive” to earnings per share in 2017, and “strongly̶1; thereafter.
Mr van Beurden said the capital expenditure of both companies was $42bn in 2015, but “we will aim to get it below $40bn next year” and even less than that in 2017.
“With a much better defined set of options, we will be able to manage capital discipline with much higher precision,” he said. But he insisted that the combined company would continue to spend heavily in the UK North Sea, investing £4bn for growth in the 2016-18 time period.
Mr van Beurden acknowledged that Shell would face questions from competition authorities in Australia, Brazil, China and Brussels, but so far it had not identified any “insurmountable issues”. He said the company did not anticipate having to sell down assets for antitrust reasons.
The deal comes at a time when BG is recovering from a tumultuous few years marked by operational problems, profit warnings and management upheaval. Its long-serving chief executive Sir Frank Chapman was replaced in 2013 by Chris Finlayson who lasted only 16 months in the job. He was temporarily replaced by Mr Gould, until Helge Lund, former boss of Norwegian state oil major Statoil, took the helm in February. He will oversee the transition, and ”then will probably move along”, Mr Gould said.
In an interview on Wednesday, Mr Lund acknowledged he had “mixed emotions” about Shell’s bid. “I came to BG to turn it around,” he said. “I came to build a company, not to sell it.”
Key points of the deal
● Deal valued at £47bn, 52% premium to 90-day average price
● BG shareholders receive per share: 383p cash, 0.4454 Shell B shares
● BG shareholders to own 19% of combined company
● Adds 25% to Shell’s proved oil and gas reserves
● Adds 20% to its production
● Annual pre-tax savings of $2.5bn
● Dividend of $1.88 a share
● $25bn buyback 2017-20
● Seeking clearance from competition regulators in UK, EU, China, Brazil and Australia
● BG directors unanimously recommend the deal
● Deal expected to be completed early 2016
● Shell expects asset sales to total $30bn in 2016-18
Reporting by Claer Barrett, Guy Chazan, Arash Massoudi and David Oakley in London|
|bathargyle: BG. share price is keeping lower - what's going on?|
BG Group share price data is direct from the London Stock Exchange