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Final green light for Shell-BG takeover

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By Jillian Ambrose: 2:19PM GMT 28 Jan 2016

BG Group shareholders have voted through Shell’s £40bn takeover bid by an overwhelming majority.

The widely expected final nod for the landmark energy merger was voted through with 99.55pc of BG investors in favour, ending a controversial nine month campaign by Shell to cement its new strategic direction.

The tie-up received an 83pc approval vote from Shell shareholders on Wednesday, despite early fears that the deal was overpriced due to the collapse of oil prices since the bid was made last April.

BG shareholders were unlikely to oppose the multi-billion pound offer, which will bring to an end the firm’s almost 20 year history within the next two weeks, but at an attractive price.

Shell has consistently countered fears that it is overpaying for the deal, saying that the BG deal takes a long-term view of the sector and would provide a “springboard” back to profitability.

Barclays claims the firm is now better prepared to ride out the oil price downturn.

“The acquisition of BG should, on our calculations, enhance Shell’s free cash flow profile in almost any oil price environment and the additional further scale in both linquefied natural gas and deepwater Brazil should critically give the management far more portfolio options – and lower-cost ones – than would otherwise have been the case,” Barclays said.

Debt-laden Shell is set to benefit from BG’s better than expected financial performance from its deepwater and liquefied natural gas (LNG) assets.

BG overdelivered on its expected 2015 production rate of 680-700 thousand barrels of oil equivalent per day (kboed) with global production hitting the 704 kboed mark.

But Barclays cautioned that even after the merger, Shell will not be able to escape the squeeze in earnings from falling oil prices.

It will 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.

The takeover is scheduled to be complete by February 15.

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