Bloomberg News

Exxon, Shell Have Capacity for BG Bid After CEO Exit, RBC Says

April 29, 2014

Exxon Mobil (XOM:US) Corp., Royal Dutch Shell Plc (RDSA) and Chevron Corp. (CVX:US) have the capacity to bid for BG Group Plc (BG/) after Chief Executive Officer Chris Finlayson resigned yesterday, said RBC Capital Markets.

Finlayson’s sudden departure has started speculation that the U.K.’s third-largest oil company may become a target as bids for European companies including drugmaker AstraZeneca Plc (AZN) and Alstom SA (ALO) show an increased appetite for deals. BG, which has oil assets in Brazil, gas discoveries in Tanzania and a gas-export plant in Australia, has a market value of 39.6 billion pounds ($66.7 billion).

“Changing CEO after 15 months and review of operating, investment and portfolio management plans raises questions on a possible takeover,” Peter Hutton, a London-based analyst at RBC, said in a note yesterday. Exxon Mobil, Shell and Chevron have “the capacity to pursue a cash acquisition” and may need to offer a 20 percent premium to the current share price.

BG, trading “at a materially greater” discount to its peer group, may also examine plans to sell some assets in Brazil or Tanzania, Deutsche Bank AG said in a note e-mailed today. The company shares dropped 14 percent on Jan. 27, when Finlayson unveiled project delays, and haven’t recovered yet.

Permanent Successor

The company, based in Reading, England, yesterday said that the CEO resigned for personal reasons after a little more than a year in the job. He has been replaced by Chairman Andrew Gould until a permanent successor is found.

BG yesterday also ditched an output forecast for 2015 that’s just three months old. At the same time, the directors reiterated their commitment to the company’s strategy presented by Finlayson in May.

This was a “strange announcement,” Neill Morton, a London-based analyst at Investec Bank Plc, wrote in an e-mailed report yesterday. Directors “seems happy to usher” the CEO “through the exit” while staying committed to his strategy.

BG rose as much as 2.4 percent to 1,174 pence in London trading today.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net Alex Devine


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Companies Mentioned

  • XOM
    (Exxon Mobil Corp)
    • $97.08 USD
    • -0.35
    • -0.36%
  • CVX
    (Chevron Corp)
    • $124.72 USD
    • -0.24
    • -0.19%
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