| Will Shell Benefit from $70B Merger Deal with BG Group? - Analyst Blog | |
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Integrated energy major, Royal Dutch Shell plc RDS.A announced that it has entered into a deal with BG Group plc. Per the agreement, Shell is expected to acquire the leading upstream energy player in UK for a total consideration of $70 billion – including both cash and equity payments. This is the biggest merger among energy firms in a decade.
For every BG share, Shell has decided to pay 383 pence in cash and 0.4454 Shell B shares. After the closure of the deal, BG Group will likely have 19% ownership in the combined group.
Many analysts are anticipating that the total value of the combined company will be more than $296 billion. Hence, with the transaction, Shell – currently with market capitalization of $195 billion – will get closer to the world’s largest publicly traded oil company, Exxon Mobil Corporation XOM, which is currently valued at $360 billion.
Moreover, as per media releases, during entire 2014, total production per day – combining both Shell and BG Group – was as high as 3.7 million barrels of oil equivalent (BOE). This is very near the 4 million BOE output last year by Exxon Mobil.
Overall, although the accord came in a weak oil pricing environment – as West Texas Intermediate crude has fallen more than 50% since last June owing to plentiful supply of the commodity − it should prove lucrative in the long run. This can be supported by Shell’s statement that its proved oil and gas reserves will get a boost of 25% following the merger. Shell will also benefit from the merger as BG Group − the third largest energy player in UK − has many lucrative natural gas projects globally.
The merger will also be beneficial for BG Group as following the completion of the deal, its shareholders will start getting a higher dividend of $1.88 per ordinary share this year and probably in 2016 too.
Halliburton Company’s HAL $35 billion merger with smaller rival Baker Hughes Incorporated BHI, which awaits regulatory approvals, is also a prime example of a deal in an unfavorable business scenario.
Shell currently carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BAKER-HUGHES (BHI): Free Stock Analysis Report HALLIBURTON CO (HAL): Free Stock Analysis Report ROYAL DTCH SH-A (RDS.A): Free Stock Analysis Report EXXON MOBIL CRP (XOM): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research
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Halliburton is a and oil producing company based in United states of america. Halliburton is listed in United States of America. Its market capitalisation is US$ 33.4 billions as of today (€ 31.2 billions). Its stock quote reached its lowest recent point on January 25, 2002 at US$ 10.06, and its highest recent level on April 26, 2024 at US$ 38.54. Halliburton has 867 249 984 shares outstanding. |