The fact the same investors own nearly half of both firms means the deal of Royal Dutch Shell's takeover of BG Group is still likely to go through even as it might look less attractive after the slide in oil prices.
According to data publicly available, investors holding about 43 percent of Shell's shares also hold 53 percent of BG. More than 12 percent of Shell and nearly 7.5 percent of BG are, for example, held together by Blackrock, Franklin Mutual Advisers and Norges.
After the takeover received its final regulatory seal from China this week, investors will be voting separately on the deal at meetings expected next month. There is a growing notion that a rejection of the takeover could entail losses all round which makes it more painful for those with shares in both companies.
The implications are that are that while the BG shares would likely collapse, Shell would lose a rare opportunity to increase its production base over the next few decades by snapping up a smaller company with some key assets, investors and analysts say.
"I think the vote will be positive for the deal. Indeed, with the cross-holdings very few holders will be voting against as that will cost them money," said Niels Lammerts van Bueren, portfolio manager at Dutch arbitrage fund TRZ Funds that trades shares in both companies.
The strategic sense of a merger that will make Shell the world's top liquefied natural gas (LNG) trader and a key player in Brazil's rapidly developing offshore oil production was challenged by a few investors and analysts.
However investors have been left worried about whether Shell will be able to maintain its dividend if the $54 billion takeover goes through, after the 30 percent slump in oil prices to below $40 a barrel since the takeover was announced in April.
The assumption that oil prices will rise over time to cover the relatively high costs of production in areas such as Australia and Brazil is the basis of Shell's acquisition of BG.
The deal was worth $70 billion in April when Shell offered a 50 percent premium to BG's April 7 share price and it now includes a cash payment which Shell plans to cover by increasing its debt.
Despite a spending cut of 20%, thousands of job cuts, delayed or scrapped huge projects and increased borrowing in the face of the oil price slump this year, Shell has managed to maintain its dividend payouts.
In order to cope with a low oil price environment, the Anglo-Dutch company has announced further cost savings and job cuts after the completion of the deal.
The chances of an investor revolt are slim, according to analysts and investors even as investor concerns remain and Shell shares trail in rivals including Exxon Mobil and BP in recent months.
The deal must be approved by a majority of voting BG shareholders, who also represent at least 75 percent of the outstanding shares, in order for it to pass. For Shell, it requires a majority.
"I still think there is good industrial logic for the two companies to be put together and the potential synergies may well be even more valuable in the current tough environment for oil companies," said Richard Marwood, senior investment manager at AXA Investment Managers, which owns Shell and BG stock.
(Source:www.reuturs.com)
According to data publicly available, investors holding about 43 percent of Shell's shares also hold 53 percent of BG. More than 12 percent of Shell and nearly 7.5 percent of BG are, for example, held together by Blackrock, Franklin Mutual Advisers and Norges.
After the takeover received its final regulatory seal from China this week, investors will be voting separately on the deal at meetings expected next month. There is a growing notion that a rejection of the takeover could entail losses all round which makes it more painful for those with shares in both companies.
The implications are that are that while the BG shares would likely collapse, Shell would lose a rare opportunity to increase its production base over the next few decades by snapping up a smaller company with some key assets, investors and analysts say.
"I think the vote will be positive for the deal. Indeed, with the cross-holdings very few holders will be voting against as that will cost them money," said Niels Lammerts van Bueren, portfolio manager at Dutch arbitrage fund TRZ Funds that trades shares in both companies.
The strategic sense of a merger that will make Shell the world's top liquefied natural gas (LNG) trader and a key player in Brazil's rapidly developing offshore oil production was challenged by a few investors and analysts.
However investors have been left worried about whether Shell will be able to maintain its dividend if the $54 billion takeover goes through, after the 30 percent slump in oil prices to below $40 a barrel since the takeover was announced in April.
The assumption that oil prices will rise over time to cover the relatively high costs of production in areas such as Australia and Brazil is the basis of Shell's acquisition of BG.
The deal was worth $70 billion in April when Shell offered a 50 percent premium to BG's April 7 share price and it now includes a cash payment which Shell plans to cover by increasing its debt.
Despite a spending cut of 20%, thousands of job cuts, delayed or scrapped huge projects and increased borrowing in the face of the oil price slump this year, Shell has managed to maintain its dividend payouts.
In order to cope with a low oil price environment, the Anglo-Dutch company has announced further cost savings and job cuts after the completion of the deal.
The chances of an investor revolt are slim, according to analysts and investors even as investor concerns remain and Shell shares trail in rivals including Exxon Mobil and BP in recent months.
The deal must be approved by a majority of voting BG shareholders, who also represent at least 75 percent of the outstanding shares, in order for it to pass. For Shell, it requires a majority.
"I still think there is good industrial logic for the two companies to be put together and the potential synergies may well be even more valuable in the current tough environment for oil companies," said Richard Marwood, senior investment manager at AXA Investment Managers, which owns Shell and BG stock.
(Source:www.reuturs.com)
