11th Feb 2016 08:46
LONDON (Alliance News) - Royal Dutch Shell PLC Thursday said it has cancelled a multi-billion bridge credit facility that it had secured to fund cash consideration of the acquisition of BG Group PLC as it can afford to pay it using existing resources.
Shell and BG are set to formally complete their merger next Monday after both sets of shareholders approved the deal last month.
Shell on Thursday said the USD10.07 billion bridge credit facility agreement it signed with a group of banks back in May has now been cancelled. The facility was set up to fund the full amount of the cash consideration due to be paid when the deal is completed on Monday, but Shell no longer needs the facility because it can afford to pay the sum using existing cash resources, it said.
Both companies published their set of results for their last financial year as independent companies, with Shell and BG both reporting steep drops in earnings as lower oil prices hammered results.
The deal is the biggest UK-to-UK merger in history, breaking a record previously held by the merger of Glaxo Wellcome and SmithKline Beecham in 2000 to form GlaxoSmithKline PLC. It is also the biggest deal in the oil and gas sector since the turn of the century, when a fall in the oil price created an environment similar to the one providing today's backdrop that led to the creation of ExxonMobil Corp and acquisitions by BP PLC and Chevron Corp.
Shell 'A' shares were down 2.5% to 1,418.00p whilst 'B' shares were down 2.4% to 1,422.00p. BG shares were trading down 1.4% to 1,012.00p.
By Joshua Warner; [email protected]; @JoshAlliance
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