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Shell’s £36bn bid for BG is set to get boost from Brazil

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By Jon Rees For The Mail On Sunday: 24 JAN 2016

Shell’s bid to acquire BG Group has been given a boost by news from Brazil that a much feared tax hike will be avoided.

Fears of a larger tax bill on oil groups operating in Brazil had caused some investors to oppose the £36billion takeover of BG, which will create a group with major assets in the South American country.

Brazil’s National Energy Policy Council will this week announce that it will continue with the same way of calculating royalties due from oil and gas.

The Brazilian authorities were considering changing the system, which was expected to have increased the minimum tax levied, to increase revenues as the country’s downturn continues.

The worries over a higher tax bill were one of the reasons why leading Shell investor Standard Life refused to back the deal last year.

Shell is understood to be confident that the deal will win enough support from investors, who will vote on it this Wednesday. A simple majority in favour from them is needed to pass the deal.

BG Group investors will vote on Thursday, when a 75 per cent majority is required.

The offer was announced in April last year and saw Shell offer a 50 per cent premium to BG’s share price at the time. The offer was worth 1350p a share, made up of 383p in cash and 0.44 of a Shell share for each BG share.

Both firm’s shares have tumbled since then as the price of oil has fallen from more than $65 (£45.48) a barrel to $31.21 last week.

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