“There will be a number of Shell shareholders against but I think it will probably go through,” said Cavendish Asset Management senior investment manager Paul Mumford.
“And on the BG side it looks a shoo-in. It looked a fair valuation at the time and it looks an even better valuation now. So they’ll be saying ‘thank you very much chum, we’ll vote in favour of it’,” he added. Cavendish owns shares in both companies. In his Shell proxy vote Mumford moved to block the deal while as a BG investor he has backed it.
The oil price has tumbled from about $55 a barrel when the deal was agreed last April to $31 today.
Shell in April offered 0.4454 of its shares and 383p for each BG share, valuing the transaction at $70 billion and offering a 50% premium.
Downward pressure: Oil prices have tumbled to their lowest levels for more than a decade (Picture: Reuters)
Beawiharta/Reuters
As Shell’s shares have dropped with the price of oil the deal’s value has declined to $51 billion. But Shell says it is better off with BG rather than alone in a downturn, while in the longer term the acquisition puts it in a much stronger position.
The firm also sees opportunities to cut costs through the deal. In December it said it would cut 2,800 jobs from the combined group, if the deal goes ahead – on top of the 7,500 redundancies announced last July.
