It has been more than a decade since the last big oil merger but now Shell have broken the truce and swooped on smaller rival BG.
The deal is worth 64.4 billion euros, with the buyout offering BG shareholders a 52% premium to sell out. It gives Shell access to BG’s markets in Brazil, East Africa, Australia, Kazakhstan and Egypt. They include some of the world’s most ambitious liquefied natural gas projects.
It also means Shell steals a march on ExonnMobil as it tries to close the gap on the world’s biggest oil company.
The recent downturn in oil prices, the glut in supply and Saudi Arabia refusing to cut production means market conditions are similar to those at the end of the 20th century when there was a series of takeovers as competitors looked to cut costs and eliminate competition.
The deal should generate pretax synergies of around 3.4 billion euros per year and result in BG shareholders owning around 19 percent of the combined group.
Oil companies with strong proven assets and low exploration costs
are likely to be the next targets for big predators with similar appetites.