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Shell under fire over BG Group takeover as oil price slump continues

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Robin Pagnamenta Energy Editor: November 24 2015

A leading Royal Dutch Shell shareholder has urged it to consider renegotiating the terms of its £43 billion takeover of BG Group.

It said that circumstances had “changed so much” since the proposed deal was announced in April that Shell should cut the price. Figures show that investors are betting more heavily on further falls in the oil price than at any time for more than a year.

Summary by John Donovan of the rest of the article:

  • Shell CEO Ben van Beurden has previously stated that for the takeover to work oil prices needed to be $67 per barrel in 2016, raising to $75 in 2017 and $90 by 2018
  • Brent crude is currently trading at only $44 and the evidence is of a growing supply glut
  • The deal has already been attacked by Ian MVeigh of Jupiter Fund Management 
  • Now Neil Passmore, CEO of an investment Bank, says the price is too high and alleges that the deal is being driven by the egos of senior executives
  • Lucas Herrmann of Deutsche Bank agrees that the price being paid by Shell now looked expensive.

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