We agreed to buy BG Group in £47bn deal- Royal Dutch Shell

Royal Dutch Shell says it has agreed to buy oil and gas exploration firm BG Group in a deal that values the business at £47bn.

The two firms say they have reached agreement on a cash and shares offer which gives investors a 50% premium on BG Group's share price on 7 April.

 

The deal could be one of the biggest of 2015 and could produce a company with a value of more than £200bn ($296bn). 

BG Group's shares opened up 42% on the London Stock Exchange at 1,293.5p.

Shell's £177bn market capitalisation dwarfs that of BG, which now stands at £31bn after a 20% fall in its share price over the past year.

Dividends

BG Group is the UK's third largest energy company, and currently employs about 5,200 people in 24 countries.

It was created in 1997 when British Gas demerged into two separate companies: BG and Centrica.

BG took control of exploration and production while Centrica took charge of the UK retail business of the former British Gas. 

In 2000, BG split into BG Group and Lattice Group.

Shell said BG Group shareholders would enjoy higher dividends, as it confirmed its intention to pay its existing shareholders $1.88 per ordinary share this year.

That compares with a dividend of just $0.14 that BG Group shareholders can expect to receive this year.

The oil giant also said it expected to commence a share buyback programme in 2017 of at least $25bn.

Shell said it would also provide BG Group shareholders with a "mix and match facility", allowing them to vary how much they receive in cash and new Shell shares.

Shell and BG Group expect to make annual savings of $2.5bn following the deal.

But Shell chief executive Ben van Beurden said he remained committed to North Sea oil and expected to invest £4bn between 2016 and 2018. 

Shell said the deal would also add 25% to its proven oil and gas reserves and 20% to production capacity, particularly in Australia's liquid natural gas (LNG) market and in deep water oil exploration off the Brazilian coast.

BG Group shareholders will own approximately 19% of the combined group following the deal.