European Commission Approves Shell’s Acquisition of BG Group
Royal Dutch Shell, the giant oil company, can now proceed with its plans to acquire BG Group, an oil and gas company that is based in the UK, after the highest antitrust regulatory body of Europe unconditionally approved the acquisition deal.
In April, the two firms signed a takeover deal worth US$70 billion, indicating to the world that fall in energy prices is definitely having an impact on the international oil and gas industry.
The top competition authority of the European Union (EU), the European Commission, briefly investigated the deal and came to the conclusion that it will not give Shell an opportunity to influence gas and oil prices in Europe and that the competitiveness of these markets will be maintained.
Ben Van Beurden, the chief executive officer of Shell, said that the companies have to conclude their deal early in 2016. However, the deal still requires shareholders’ votes.
According to an Beurden, the deal was
a springboard to change Shell into a simpler and more profitable company, making Shell more resilient in a world where oil prices could remain low for some time.
Shell has to satisfy five preconditions before it can proceed with the deal, and the approval from the EU regulator is the second of them. The first precondition was an approval from the competition authority of Brazil, which the company received in July. Shell still requires approvals from the competition authority in China and the antitrust and foreign investment regulator in Australia. The deal got the approval of the antitrust authorities of US in June.
Van Beurden said:
Receiving clearance from the European Commission underlines the good progress we are making on the deal.
The EU stated that it had chiefly investigated the three markets, in which the operations of the two companies overlap. These markets are natural gas supply, oil and gas reserves exploration, and liquefied natural gas supply. The regulator came to the conclusion that the Shell will continue to have a limited market share and that the competition related to the above three markets will remain strong. The regulator also concluded that the merger will not hinder other firms from gaining access to Shell facilities across Europe and the North Sea.
The merged companies intend to dispose of certain noncore operations provided reasonable value is obtained for these operations. Shell wants these disposed operations to generate as much as US$30 billion between 2016 and 2018.
