The Conversation (0)
Bloomberg reported that Royal Dutch Shell (NYSE:RDS.A) is still planning to move ahead with its acquisition of BG Group (LSE:BG) despite falling profits and a worsening oil market.
Bloomberg reported that Royal Dutch Shell (NYSE:RDS.A) is still planning to move ahead with its acquisition of BG Group (LSE:BG) despite falling profits and a worsening oil market.
As quoted in the publication:
Crude’s slump below $30 a barrel has driven down Shell’s market value to the lowest in almost seven years and prompted concern it may be overpaying for BG’s production and cash flow. Shell has prepared for a prolonged market slump by cutting staff and spending. Job losses at both companies in 2015 and 2016 will exceed 10 000, including 2 800 after the combination takes effect, according to chief executive officer Ben Van Beurden, repeating previous announcements.
“Shell has reiterated its determination to see the BG deal through, despite some concerns around the viability of the transaction given a depressed oil price which is under continuing pressure,” Richard Hunter, Head of Equities at Hargreaves Lansdown Stockbrokers, said in an e-mail. BG’s “robust operational performance” in Australia and Brazil “vindicate a large part of the rationale for the deal,” he said.