Shell Takeover Of BG Is Given Green Light

The European Commission has cleared Shell's planned takeover of BG Group, a move that would create the biggest firm on the FTSE 100.

The proposed cash and shares deal - worth £47bn at the time of the offer in April - is yet to be agreed by shareholders of both energy producers but the unconditional merger clearance from Brussels helps clear the way for the votes.

BG said the decision was the second in five regulatory hurdles that needed to be overcome.

In announcing its decision, the Commission said: "The transaction was cleared as it will not grant Shell market power in oil and gas exploration, LNG liquefaction or LNG wholesale supply.

"Shell will also not be able to prevent competitors from using its gas infrastructure in the North Sea."

The takeover, which is not due to complete until next year, aims to strengthen the Anglo-Dutch firm's position in liquefied natural gas (LNG) and bolster its proven oil and gas reserves by 25%.

Times are tough for energy companies - with Shell recently confirming plans to shed 6,500 jobs this year as oil prices hover near six-year lows.

It also slashed its investment expectations, forecasting that the downturn in prices could last a few years.

In an interview with Sky News at the end of July, chief executive Ben van Beurden said Shell was aiming to become a "simpler and more profitable company".

He added that after the BG transaction, the company would cut spending on exploration while reviewing the way it invests capital in long-term projects and disposing of assets.

"These are challenging times for the industry, and we are responding with urgency and determination, but also with a great sense of excitement for the future," he said.