Super Merger of the Decade in Oil Industry

According to Reuters, Royal Dutch Shell, fourth largest company in the world, in terms of revenue, and one of the six oil and gas super majors agree to buy BG for $70 Billion ( 47 Billion Pounds ) which said to be the Super Merger of the Decade in the Oil Industry.

In a joint statement, the two firms said that as part of the recommended deal Shell would pay 383 pence in cash and 0.4454 Shell B shares for each BG share. It said this represented a premium of around 52 percent to the 90 trading day average.

The deal will result in BG shareholders owning around 19 percent of the combined group.

The oil giant also said it expected to commence a share buyback programme in 2017 of at least $25bn The deal comes at a time of uncertainty for oil and gas companies. In the past six months the price of oil has fallen by about 50%. Meanwhile, analysts have warned that investment in North Sea oil exploration has all but dried up, threatening the entire industry.

BG Group warned in February that it would write down the value of its oil and gas assets by nearly £6bn ($9bn) due to the oil price slump. Similarly, Shell announced in January that it would be cutting spending by nearly £10bn over the next three years.