Some of the largest shareholders in Royal Dutch Shell, the giant petroleum and energy group, are expected to publicly back the company’s $53bn (£35bn) takeover of BG amid concern the deal could be sabotaged by those who want it scrapped.
The Guardian understands that a group of Shell shareholders, headed by Old Mutual’s Richard Buxton, believe the deal still makes sense and are expected to declare so publicly in the next day or two. Those who are considering going public in support of the deal would account for about 10% of the equity.
Buxton is said to think that the low oil price environment will lead to further cost-cutting in the sector and others such as Chris Wheaton of Allianz Global Investors are keen on the deal going ahead, believing it will bring Shell some much-needed deep water assets.
One significant Shell shareholder said: “In the medium to long-term this is a good deal.”
The Qatar Investment Authority and Henderson and Aberdeen Asset Management are also believed to be keen to support the deal.
Some shareholders such as David Cumming, head of equities at Standard Life Investments, have argued that the deal no longer makes sense because of the fall in the price of oil. He called on Shell’s chief executive, Ben van Beurden, to pay a $750m break fee to scrap the deal or renegotiate the terms.
The only other option is for shareholders to vote against the takeover, he said. The price of oil has slumped from $115 a barrel in summer 2014 to less than $40. On Monday it dropped to an 11-year low of $36.17.
Shareholder approval is the final remaining hurdle to clear Shell’s takeover of its smaller rival, one of the largest energy deals in a decade that will create the world’s most powerful liquefied natural gas (LNG) trader.
Royal Dutch Shell and BG Group shareholders are expected to vote on the merger of the two companies on 27 and 28 January respectively, the firms said on Monday. Shell needs 50% shareholder approval and 75% of BG Group investors to agree for the deal to go ahead.
Worth $70bn at the time of the offer in April, it is worth about $53bn at current market valuations as shares in commodities companies have endured a rough year as the price of oil tumbled.
BG asked Britain’s high court on Monday for approval to publish its scheme document and to convene the shareholder meetings, the companies said.
Court approval is expected on Tuesday, the companies said, followed by the publication of BG’s scheme document and the Shell shareholder prospectus.
Following shareholder approval, the delisting of an acquired company’s shares typically takes about 10 working days. This means Shell’s takeover of BG could be completed in mid-February.
This article was written by David Hellier, for theguardian.com on Monday 21st December 2015 18.53 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010