Shell has cleared the final regulatory approval for its US$70 billion acquisition of BG Group, after receiving "unconditional merger clearance" from the Chinese Ministry of Commerce (MOFCOM).
This approval from China is the final regulatory clearance that is a pre-condition to the combination, leaving just shareholder approval to be gained before the process can complete.
Shell also announced that the planned merger would lead to further 2800 job cuts, amounting to some 3% of the combined companies global workforce, said Simmons & Co. This is in addition to the 7500 job reductions already announced, with certain office locations to be consolidated, the analyst firm said on Monday.
When the merger goes through, the deal will add about 25% to Shell’s proven oil and gas reserves and 20% to production, including LNG and deepwater assets in Brazil (and Australia), and enable an increase in asset sales to $30 billion by 2016-18.
According to Simmons & Co., BG's Brazilian pre-salt assets are "the crown jewel" of the deal.
Shell made the multi-billion dollar cash and share offer for BG in April that GlobalData called the largest mega deal since Exxon and Mobil merged in 1998.
Shell's offer was a 52% premium to BG Group's share price, based on the previous 90 day's trading, at the time of the offer back in early April.
BG Group’s CEO Helge Lund said today: “Following today’s approval from MOFCOM, all pre-conditional regulatory approvals for the combination have been received and we now move to the next phase. I am pleased that we have continued to deliver a strong operating and safety performance throughout the offer period which is a credit to our teams across the business. The proposed combination has strong industrial logic, particularly in deep water production and LNG, and will accelerate the delivery of value to our shareholders.”
Image: Helge Lund. Photo from BG Group.
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