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Further doubts over Shell/BG deal

The proposed tie-up between Royal Dutch Shell and BG Group has come under increased scrutiny from institutional shareholders, but they're ignoring the long-term rationale behind the deal.
December 29, 2015

Midway through December, Chinese anti-trust regulators granted unconditional clearance to the proposed £47bn merger between BG (BG.) Royal Dutch Shell (RDSB). The decision effectively removed the final regulatory hurdle, although the deal is still subject to shareholder approval at meetings that are expected to be convened on 27 and 28 January 2016, respectively.

IC TIP: Hold at 928p

With anti-trust strictures no longer an issue, you would imagine that final approval would amount to a formality, but some industry analysts have questioned whether the terms of the offer still represent fair value in light of reduced assumptions on energy prices through 2016. Spot prices for Brent crude are down by a third since the proposal was announced back in April, so it’s perhaps understandable that there are gathering reservations about the deal.

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