Russell: Shell-BG Deal May Be End Point Rather Than Harbinger



Russell: Shell-BG Deal May Be End Point Rather Than Harbinger
There is a widespread assumption that weak commodity prices are likely to spark a wave of merger and acquisition activity as stronger companies seek to buy assets on the cheap.

Reuters

KUALA LUMPUR, May 19 (Reuters) - There is a widespread assumption that weak commodity prices are likely to spark a wave of merger and acquisition activity as stronger companies seek to buy assets on the cheap.

The $70 billion buyout of BG Plc by larger rival Royal Dutch Shell is generally viewed by investors and analysts as the first big deal in a likely series of major mergers and acquisitions in the resource sector.

After all, the last time commodity prices fell sharply, around 15 years ago, there was a rash of mega-mergers, such as Exxon with Mobil and Conoco with Phillips in the energy space, and BHP with Billiton and Rio Tinto's purchase of Alcan.

Notwithstanding the Shell-BG deal, it appears executives may be more cautious this time around, eschewing mega-mergers in favour of smaller acquisitions and in-house projects to add shareholder value.

Ryan Lance, the chief executive of ConocoPhillips, was adamant that he didn't expect a "big M&A wave any time soon".

Speaking at the Asia Oil & Gas Conference in Kuala Lumpur on Monday, Lance said the rationale that drove the previous round of major deals doesn't quite apply any more.

Why would a giant international energy or resource company want to go down the M&A route currently?


123

View Full Article

WHAT DO YOU THINK?


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

RELATED COMPANIES