It’s the return of the mega deal as oil giant Royal Dutch Shell announces a recommended cash and shares offer for gas group BG in one of the biggest deals in the sector in the last 20 years 8.49am BST Investors in Europe have mixed feelings this morning. The FTSE was briefly back above 7,000, but has fallen back a bit. 8.29am BST More reaction is coming in on the Shell/BG Group £47bn mega deal.Marc Kimsey, senior trader at Accendo Markets, has sent a note entitled oil m&a - we’re just getting started: The deal between Royal Dutch Shell and BG Group will prompt sector consolidation. The decline in oil price over the past year has battered some stocks which are clearly now looking attractive.In the last year BG shares fell 30%, shares in Tullow Oil have fallen 65%, Premier Oil down 55%, and Petrofac down 20%. By comparison sector behemoths BP and Royal Dutch Shell have only shed 10% over the same period leaving them in the position of predator rather than prey. Whether precipitated by the falling oil price or BG’s more recent production woes, Shell has acted opportunistically, as it previously implied it might if the occasion arose.Already the largest FTSE 100 constituent by a considerable margin, this deal will further consolidate Shell’s position in that regard. There are clear attractions from Shell’s viewpoint, including its additional exposure to liquified natural gas, almost immediate cost synergies and, in due course, asset sales from a partial break up of BG’s operations. 8.21am BST The FTSE 100 is up 0.5% at 6,998.64. Top performers: 8.13am BST Big spike in BG shares this morning, up 42% at £13 following confirmation that Shell wants to buy the company for £47bn.Shell shares opened down 2.9% at £21.45. 8.07am BST Shell boss Ben van Beurden told has told reporters that Helge Lund will “probably move along” if the deal goes ahead.Looks like Helge Lund, the new heftily remunerated CEO of BG Group, will be leaving once the Shell deal is done. He didn't stay long 7.53am BST It is also a big day for Greece, following the arrival in Moscow of prime minister Alexis Tsipras for a meeting with Vladimir Putin later today.Arriving earlier today in Moscow ahead of tomorrow's meeting with Russian President, V. Putin. @PutinRF_Eng #Greece pic.twitter.com/HyW5FoPZ6R 7.43am BST Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.The mega deal is back. The big corporate news this morning is that oil giant Royal Dutch Shell has announced that it has agreed to buy gas group BG for £47bn.Bold, strategic moves shape our industry. BG and Shell are a great fit. This transaction fits with our strategy and our read on the industry landscape around us. BG will accelerate Shell’s financial growth strategy, particularly in deep water and liquefied natural gas: two of Shell’s growth priorities and areas where the company is already one of the industry leaders. Furthermore, the addition of BG’s competitive natural gas positions makes strategic sense, ahead of the long-term growth in demand we see for this cleaner-burning fuel. The offer from Shell delivers attractive returns to shareholders and has strong strategic logic. BG’s deep water positions and strengths in exploration, liquefaction and liquified natural gas shipping and marketing will combine well with Shell’s scale, development expertise and financial strength. The consolidated business will be strongly placed to develop the growth projects in BG’s portfolio. The transaction will take time to complete, during which my team and I will remain committed to BG and our shareholders, and to safely delivering our 2015 business plan.After the fuss about Helge Lund's sign-on fee at BG, now seems he will receive millions of pounds for a few days at the helm. #ToughJob Continue reading...
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