LNGWN poll: how will the shareholders vote on Shell-BG deal?

The global LNG industry is bracing for the outcome of one of the biggest deals in history of this relatively young industry as the shareholders are about to vote on the proposed Shell-BG merger.

Both Shell and BG need 50 percent shareholder approval plus one vote to approve the combination but BG also requires votes representing 75 percent of the total value of its shares in favour.

Some shareholders have already showed support while others declined to reveal whether they will vote in favour of the deal.

Standard Life Investment, a major investor in Royal Dutch Shell, said on Monday it will vote against the merger saying that the proposed terms of Shell’s acquisition of BG “are value destructive” for Shell shareholders.

If approved, the deal would raise Shell’s market value close to $175 billion, and would also create one of the biggest LNG players in the world.

Shell’s initial estimations showed the merger would be profitable with a price of around US$70 per barrel but that estimation was reduced further to US$60 per barrel, as Shell revealed further costs cutting options.

Shell’s CFO Simon Henry said to make the deal work at US$50 per barrel, the company intends further capital spending cuts bellow the planned US$35 billion for 2016. Share buybacks will also be delayed and script dividends extended as investors will be offered discounted shares instead of cash.

LNG shipping

Shell is one of the world’s largest LNG shipping operators, managing and operating more than 40 carriers.

The Hague-based giant has LNG supply projects either in operation or under construction in seven countries. Shell also has a major interest in Hazira LNG import plant in India, and long-term access to capacity in several others in Europe, the Middle East and North America.

Shell is also building the giant Prelude FLNG facility, which is expected to start production offshore Western Australia in 2016.

UK-based BG Group has a fleet of around 25 owned and leased LNG carriers. The company’s global portfolio of LNG includes multiple production sources around the world, including Egypt, Trinidad and Tobago, Australia and the US.

LNG poll

LNG World News created a poll for our readers to give their opinion on how they think Shell’s shareholders will vote on the proposed merger. You can vote and check out the current results of the poll below: