European Commission Approves Shell’s acquisition of BG Group

European authorities approved under the EU Merger Regulation the acquisition of BG Group by Royal Dutch Shell, explaining that Shell would not be able to influence prices and that oil and gas markets would remain competitive after the transaction.

‘The Commission concluded that the takeover would not lead to Shell benefiting from market power in a number of markets, namely oil and gas exploration, the liquefaction of gas and the wholesale supply of liquefied natural gas (LNG). Moreover, the Commission found that Shell would be unable to shut out its competitors from access to its liquefaction facilities that supply LNG into the European Economic Area (EEA) or from gas transportation and processing infrastructure in the North Sea’ the European Commission wrote on Wednesday.  

The Commission focussed its investigation on the markets where the activities of Shell and BG Group overlap: the exploration for oil and gas reserves, the supply of natural gas and the liquefaction and supply of LNG. 

‘The Commission found that after the transaction the merged entity's market share would remain limited in the exploration for oil and gas reserves, the liquefaction of LNG and the wholesale supply of LNG. Moreover, a number of strong competitors would remain active in these markets after the merger.’

In April, Shell and BG reached agreement on the terms of a recommended cash and share offer.

Under the terms of the Combination, BG Shareholders will be entitled to receive, for each BG Share, 383 pence in cash; and 0.4454 Shell B Shares.

According to documents published by the two companies in April, Shell expects to commence a share buyback programme in 2017 of at least $25 billion for the period 2017 to 2020.