A fresh drop in in oil prices and political instability in Brazil is making investors miss out on about $5.5 billion in Royal Dutch Shell Plc’s pending takeover of BG Group Plc.
BG closed on Monday at 990.4 pence, about 9.5 percent below Shell’s cash-and-stock offer. The difference in share prices in the deal -- the largest in the energy sector in at least a decade -- is wider than the average for other global acquisitions bigger than $10 billion.
The takeover has already won key regulatory approvals from the U.S., European Union and Brazil. Yet a plunge in oil prices and a deteriorating economy in Brazil, a key market for Shell, threaten to erode sentiment among shareholders who may be less inclined to support a merger that was announced when crude was higher. Even in such an environment, Shell will be motivated to close the deal in order to safeguard its dividend in the long run.
“The risk-reward on this transaction is too cheap,” said Kelly, chief executive officer at the London-based brokerage specializing in mergers. “From a regulatory perspective, there shouldn’t be much risk. And yet, it’s pricing in a one-in-four chance it breaks. What you need to break this transaction is a massive rebellion from shareholders.”
Kelly is referring to his model, which shows about a 75 percent chance the deal will be completed, higher than the 55 percent probability Bloomberg data indicate. Shell’s Chief Executive Officer Ben van Beurden said he is confident investors will support the transaction, and BG shares rose for four straight days after a Sept. 9 report mentioning that he said only “something cataclysmic” could derail the $70 billion acquisition.Statoil to cut force 20 percent:
Norwegian oil and gas firm Statoil plans to have 20 percent fewer employees by end-2016 compared to 2013, its chief executive said on Monday. "Suppliers have to take their responsibility to cut costs. We are also taking our part in the restructuring. We have to simplify our work and make it smarter," Statoil's CEO Eldar Saetre told reporters on the sidelines of a conference. "At the end of 2016 we expect 20 percent fewer employees than in 2013," he said.
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Corporate Welfare?
Most interesting:
Despite turning a profit of more than $5 billion over the last year, Boeing plans to lay off up to 300 workers at its satellite assembly plant in El Segundo, CA -- and the company’s CEO Jim McNerney threatened to move many more jobs out of the United States.
The reason? Boeing officials are blaming the expired charter of the so-called Export-Import Bank.
President Obama has been urging Congress to reauthorize the bank, saying in July at the White House that, “This should be a no-brainer.”
The Ex-Im Bank offers low-interest loan guarantees when foreign companies order American goods. Boeing is by far the biggest beneficiary. In 2013, Boeing customers received credit of $8.3 billion, 40 percent of the Ex-Im Bank’s loan guarantees that year.
The U.S. Senate passed a bill reauthorizing the Ex-Im Bank, but it hasn’t come up for a vote in the House. The little known lender has become a political football within the Republican Party, pitting Tea Party conservatives against House Speaker John Boehner.At the end of this post, GE was also "involved" with the Ex-Im Bank issue. GE says they decided not to move corporate headquarters to the Dallas area (Texas) because the Texas senators were "agin" the Ex-Im Bank.
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Hillary's E-Mail Scandal? Old News; We've Moved On
Reading the tea leaves over at The Drudge Report today suggests Hillary's e-mail scandal is behind us. A lot of story lines.
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