Acquisitions by Royal Dutch Shell

Abstract

In 2005, Royal Dutch Shell became the single parent company of Royal Dutch Petroleum Company and the Shell Transport and Trading Company. The transaction was effected by way of an exchange offer by Royal Dutch Shell for the Royal Dutch shares and by way of a scheme of arrangement of Shell Transport. The terms of the transaction reflected the 60:40 ownership of the Royal Dutch/Shell Group by Royal Dutch and Shell Transport. During 2016, Royal Dutch Shell acquired BG Group for £47 billion (US$70 billion). This acquisition catapulted Shell as the world’s second largest non-state oil company after Exxon Mobil in terms of market capitalization surpassing Chevron Corporation. The combination of Shell and BG Group brought together two world class portfolios involving productive oil and gas projects and expertise in deep water and liquefied natural gas (LNG). The acquisition gave Royal Dutch Shell a dominant footprint in offshore Brazil region. BG’s acquisition bolstered Shell’s position in the fast-growing liquefied natural gas market and turned it into the largest foreign oil company in Brazil. This acquisition was the biggest in the sector since Exxon’s merger with Mobil in 1988. The acquisition was expected to result in cost savings of an amount of $3.5 billion on account of reduction in overlaps in areas of corporate, administrative, and IT operations by 2018. BG Group shareholders received 383 pence in cash plus 0.4454 Royal Dutch Shell B shares for each BG Group share. The announcement day and one day after return was −3.4% and − 0.7% for Royal Dutch Shell during BG Acquisition.