Shells proposed purchase of BG

At the point of take-over one can assume there is no great financial advantage in taking the shares or the cash. So it's simply a matter of whether you want Shell shares given the demise of BG. Presumably you bought BG for a reason. Is the reason still valid? Does Shell meet the requirement?

If you do want Shell shares, you are getting them without any charges. Seems good to me. If you dont want Shell shares then take the cash and buy the shares you do want.

jeff_chandler wrote: »

I'm in the same boat and wondering whether it be better to sell my 156 shares at the current price of £9.60 rather than wait and only get £3.83.

I have never been into finances but I inherited these shares when my parents passed away. The share certificate has been stuck in a drawer until this package came through the letter box.

Do I sell the shares and enjoy £1500 or do I leave them and allow the take over and only get £3.83 ?????
I'm absolutely baffled.

You get £3.83 + 0.4454 Shell shares currently worth £15.47 each giving a total value of £10.72/BG share at current prices. If you dont want the shares you will get the equivalent in cash based on the Shell share value at the time. One would expect the share values of BG and Shell to be close to the values corresponding to the offer by the time the offer goes ahead.

http://www.oilandgaspeople.com/news/6555/shell-bg-deal-no-longer-makes-economic-or-industrial-sense/

I am surprised that the media arent pitching this as yet another "windfall" or "bonanza" as they did with the VOD Verizon deal.

I started off feeling mildly enthusiastic about this BG /RDSB deal but now im not so sure.

As of today

BG 985p
RDSB 1544p

So each BG share is worth 383p + (0.4484 x 1544)=1075p

Difference =90p


The Saudis have stated that they are going to keep pumping oil. After all,what else can they do? their modern country depends on oil income for much of its wealth and yet the current oil price of around $34 per barrel is a huge drop on the high of $102 only a few years ago and is closer to the low of 2002 when it was under $30 per barrel.

Saudi has the second largest reserves in the world after Venezuela. Over 90% of its export revenues are oil derived along with over 75% of its budget revenues.

Put simply, if it doesnt sell oil, it doesnt have anything else. They have recently launched a new budget to cut expenditure and raise taxes as they are clearly not deriving as much oil income.

RDSB needs BG to take out a competitor, to have access to its oil and gas reserves and production and to make savings through positive synergies as they say !

More and more i think its a lame deal ofr BG shareholders and they should vote no.

RDSB needs BG more than BG needs RDSB.

There is nothing in this deal for BG shareholders.

It could have been a good deal for Shell for the reasons stated. But Shell pounced too early and offered too much. 50% premium looked high at the time, today it looks ludicrous. Shell shareholders should vote it down, but they probably won't because many are funds who also hold BG shares, so they won't mind Shell overpaying.
The possisility the deal will not go ahead is reflected in the share prices. If Shell shareholders accept the deal I expect Shell shares to fall and BG to rise. Conversely if Shell shareholders vote it down, I expect Shell shares to rise and BG to fall.

Reaper wrote: »

My view (as a Shell shares holder) is the opposite. This deal was arranged when oil prices were much higher, and as you say the outlook for the foreseeable future is a continuing low oil price.

Therefore the price being offered to BG for their shares now looks far too high. I would like to see it renegotiated at a lower price.

Interestingly I'm aware of a number of private RDSB investors who have taken the arbitrage opportunity and sold RSDB and bought BG due to the cash discrepancy (who will then become RDSB holders again but having benefited from the transaction)