Shell paid too much to buy BG Group
ARTICLE BY STEPHEN SIMKO,MORNINGSTAR PUBLISHED APR. 11, 2015 BY BUSINESS INSIDER
On April 8, Royal Dutch Shell (RDS.A) (RDS.B) (RDSA) (RDSB) announced its intention to acquire BG Group (BRGYY) (BG.) in a $70 billion cash-and-stock deal that values BG’s equity at GBX 1,350 per share, or 11% above our GBX 1,200 fair value estimate for BG at the time the deal was announced.
The deal will be roughly 70% stock and 30% cash, and it’s expected to close in early 2016. Our BG thesis has been that near-term execution problems and political issues in Brazil and Egypt were creating an attractive entry point for long-term investors.
The TRUTH will set you FREE.
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