Shell boss Ben van Beurden is optimistic that shareholders will overwhelmingly back its mega-merger with rival BG Group as investors mull the final case put out by both oil giants later this week.
The deal, worth £34billion, is set to create the western world’s largest oil and gas company.
He said: “This deal makes sense if over the next 20-30 years the oil price is above the low $60s. At that level it is value accretive. I think that’s an entirely reasonable, sensible risk to take.”
Both Shell and BG Group will publish full year trading updates on Wednesday ahead of final shareholder votes which are due on 26 January.
Mr Van Beurden hopes for a substantial victory — “I don’t really want to just have 50% plus one or that kind of narrow margin. I would love it to be in the 90s”.
If he wins the vote, and BG shareholders do their bit the next day, the deal will go through on February 15.
Several investors have come out in support of the deal despite lingering concerns about the effect of falling oil prices on the sector.
The bid has already won the backing of several major shareholders and advisory groups, with only a handful of investors publicly arguing against its merits even as oil prices have dropped below $30 a barrel for the first time in 12 years.
Last week, shareholder advisory firm PIRC recommended shareholders vote in favour of the deal, which would transform Shell into the world’s top liquefied natural gas (LNG) trader and a major deepwater oil producer.
Two other advisory groups, Glass Lewis and ISS, also issued similar recommendations to investors last week.
But Standard Life, a top-20 shareholder, said it would vote against, claiming: “A lot’s changed since the bid was announced in April last year, all of it negative.”
But another top 20 Shell shareholder, Invesco, lent its support, reinforcing the widespread impression this is a done deal – even if this is not yet fully reflected in the BG share price.
“Given the fragmented nature of the shareholder base, and the ability of many holders to have already voted with their feet and exited the stock, the chances of ‘no’ votes crossing the 50% threshold, (are) extremely small in my opinion,” said Martin Walker, Invesco’s UK equities fund manager.
“As a result, for Shell management the next few weeks are really about minimising the embarrassment of high profile dissent,” he wrote in a note to clients.
Top 30 Shell shareholder Allianz Energy fund also voiced support.
“I am positive on the deal because if you look at Shell’s historic financial performance, the businesses that have made consistently the highest return on capital are deepwater and LNG,” Christopher Wheaton, manager of the Allianz Energy fund said.
Top Shell executive Huibert Vigeveno is set to become the transitional chief executive of BG Group after the expected completion of the £34billion “mega-merger” of the two oil giants next month
The appointment of the Dutchman, who was appointed last August to spearhead the joint Shell-BG integration committee along with BG’s Sinead Lynch, comes as “no surprise” sources said.
Mr Vigeveno is likely to oversee hundreds of job cuts as part of 2,800 redundancies already outlined by Shell, which represent roughly 3% of the combined group’s workforce.
Mr van Beurden will head the merged entity after the planned completion of the deal next month, while BG’s chief executive Helge Lund is set to step down on the day the merger is signed.
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