Shell takeover of BG secures backing of ISS
Royal Dutch Shell (LON:RDSA, RDSB)’s proposed GBP 36bn (USD 52bn) takeover of rival gas and oil company BG Group (LON:BG) has been recommended by the influential proxy advisory group Institutional Shareholder Services, the Financial Times reported. ISS published a report yesterday, 8 January, in which it described the strategic rationale of the deal as “compelling”, while recognising that investors may be anxious because of the current volatility in oil’s spot prices.
When the deal was announced oil was worth approximately USD 56 per barrel but the price has since sunk to less than USD 40, the report noted. The agreed takeover price appears to be fair, according to the ISS report, even once the plummeting price of oil is taken into account.
The deal will be put to the vote by shareholders later this month and approval is required from 75% of BG investors and a majority of Shell’s shareholders, the report said. It added that the ISS report will be a significant help to the management of Shell, which is currently in final meetings with shareholders in the hope of reassuring them the company is not overpaying for BG.
Meanwhile, The Daily Telegraph reported that Standard Life Investments, which owns a 2.1% stake in Shell, announced its intention to vote to block the BG takeover. David Cumming, Standard Life’s head of equities, was quoted stating that the company believes the proposed deal to be “value destructive” as far as Shell investors are concerned.
Financial Times, Daily Telegraph