Royal Dutch Shell Plc has won the approval of its shareholders to buy BG Group Plc, sealing its biggest acquisition amid the worst oil-industry slump since the global financial crisis.
More than 80% of Shell’s shareholders voted in favour of the transaction, the company has said in a regulatory statement. Most votes were cast by proxy while other investors met in The Hague last week.
The approval vindicates Shell’s belief that it can better ride out the market rout by combining with UK oil and gas producer BG.
Crude oil prices tumbling since the deal was announced in April last year prompted some shareholders to question whether it’s paying too much.
Yet chief executive officer Ben Van Beurden has said the acquisition will boost cash flow and enhance Shell’s ability to pay dividends, while BG’s growing production will help bolster its declining output.
The planned acquisition, which will also make Shell the world’s biggest liquefied natural gas trader, now faces a vote by BG investors and a final court approval before the deal can close in mid-February.
Benchmark Brent crude has lost almost half its value since the purchase was announced and now trades near $30 a barrel. That slump, which Shell has said may be prolonged, means the company may need longer to make a profit on the acquisition.
It said last month it will break even when Brent reaches the low $60s, and add to operating cash flow per share at $50 this year. Brent for delivery in December 2020 is currently at about $50 a barrel.
Shell bid $0.4454 of its B shares and 383 pence for each BG share in April, valuing the transaction at $70bn and offering a 50% premium.
As Shell’s stock has dropped with the oil price, the deal’s value has declined to about $51bn.
