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Shell shareholders vote in favour of £40bn BG takeover


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By Jillian Ambrose: 12:35PM GMT 27 Jan 2016

Shell shareholders have given the nod to the £40bn takeover of BG Group by a strong majority.

The 83pc vote in favour of the plans paves the way for the creation of Britain’s largest public company, pending a separate vote by BG shareholders on Thursday which is widely expected back the plans.

The vote, at an extraordinary meeting in the Hague, concludes a nine month gauntlet of global regulatory hurdles, since when plunging oil prices have raised serious concerns that Shell’s offer was overpriced.

Major investor Standard Life vowed to vote against the tie-up, publically branding the deal as “value destructive” for shareholders. Privately many investors questioned whether current plans should be shelved and renegotiated in light of dramatically lower oil prices.

But shareholders shrugged off doubts over the value of the deal, backing the long-term vision of chief executive Ben van Beurden to reposition the energy giant as the largest liquefied natural gas (LNG) producer in the world.

Shell is expected to topple US rival ExxonMobil as the world’s largest LNG player, and will also benefit from the BG Group’s highly successful deepwater activities in Brazil and Australian coalseam gas assets.

Mr Van Beurden has consistently argued that the BG deal takes a long-term view of the sector and would provide a “springboard” back to profitability after consecutive quarters of heavy losses for the debt-laden firm.

Following the final result, Mr Van Beurden said: “I am delighted with the positive shareholder vote and the confidence that shareholders have shown in the strategic logic of the combination of Shell and BG. Our immediate focus is on the successful completion of the transaction and we now await the results of tomorrow’s BG shareholder vote.”

High profile funds spoke out in favour of the plans including the world’s largest sovereign wealth fund, Norges.

Richard Buxton, the chief executive of Old Mutual Global Investors, also gave the deal his backing, as did fund managers at Aberdeen Asset Management, Artemis, Allianz Global Investors, Axa Investment Management, and Henderson.

Shell will still face tough cost cutting measures following the deal. The firm has promised to slash costs and investment by $7bn (£4.9bn) and $8bn respectively, while axing 10,300 jobs in the next two years.

Shell’s share price hit six year lows last week after the firm posted fourth-quarter profit forecasts in the range of $1.6bn (£1.1bn) to $1.9bn, down strongly from $4.2bn in the fourth quarter of 2014.

In sharp contrast BG Group beat expectations with better than expected global production levels of 704 thousand barrels of oil equivalent per day (kboed), compared to forecasts of 680-700 kboed for 2015. On average its production rate for last year stands 16pc above 2014 levels.

BG shareholders will need to vote through the plans at a 75pc majority but are widely expected to back the deal at Thursday’s London vote.

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