by Veselin Valchev: Friday, 19 Feb 2016
Credit ratings agency Fitch downgraded Royal Dutch Shell Plc (LON:RDSA) by one notch to “AA-“, with a negative outlook, in response to the successful completion of the costly BG Group merger. The agency considers that adding BG’s business to the group has “deteriorated” Shell’s financial profile.
The £36bn takeover included a £13bn cash component, which Shell covered with resources at hand. The Anglo-Dutch oil major said in its Q4 results earlier this month that it had $31.75bn in cash or cash equivalents in reserve at the end of 2015.
Shell plans to restore its balance sheet strength with an ambitious $30bn disposals programme, in addition to cutting billions in capex and opex from the combined group’s spending, while further synergies from the merger are projected to save up to $3bn per year.