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The Independent: Market Report: Premier leads list of Shell takeover candidates

By Andrew Dewson
Published: 06 September 2006

It looks like traders are taking the scattergun approach in attempting to predict Shell’s corporate strategy. The oil giant was linked to no fewer than three takeover targets yesterday – Centrica, BG Group and Premier Oil.

So far, Shell has only confirmed it is “taking advice” on a possible bid for Premier Oil, the FTSE 250-listed oil exploration and production group with assets in Europe, Africa and south Asia. Traders said Shell bidding for Centrica would make a more palatable deal for British regulators after the Russian group Gazprom signalled its interest in Centrica six months ago. BG would be, by a considerable distance, the biggest deal of the three, with a market capitalisation approximately 2.5 times larger than that of Centrica and more than 20 times greater than Premier’s.

Traders are certain Shell is mulling a large acquisition. For most observers, the smart money is on Premier Oil, 6.5p firmer at 1,049p, which complements Shell’s existing exploration and production base and, unlike BG Group or Centrica, is unlikely to interest the regulators. Shares in BG climbed 6.5p to 690.5p as talk of an 800p-per-share bid did the rounds, while Centrica added another 5.75p to close at 308.25p, an all-time high closing price. Shell added 2p to 1,896p.

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