REG - BG Group Royal Dutch Shell - RECOMMENDED CASH AND SHARE OFFER FOR BG GRROUP PLC <Origin Href="QuoteRef">BG.L</Origin> <Origin Href="QuoteRef">RDSa.L</Origin> - Part 4
08/04/2015 07:22
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estimated.
3. No statement should be construed as a profit forecast or
interpreted to mean that the combined group's earnings in the first full year
following implementation of the Combination, or in any subsequent period,
would necessarily match or be greater than or be less than those of Shell
and/or BG for the relevant preceding financial period or any other period.
Part B
Report from Deloitte LLP
The Directors
on behalf of Royal Dutch Shell plc
Carel van Bylandtlaan 16
2596 HR The Hague
Netherlands
Merrill Lynch International
Merrill Lynch Financial Centre
2 King Edward Street
London EC1A 1HQ
8 April 2015
Dear Sirs
FIRM INTENTION TO MAKE AN OFFER FOR BG Group PLC (THE "TARGET") BY ROYAL DUTCH
SHELL PLC ("SHELL")
We report on the statement made by the directors of Shell (the "Directors") of
synergy benefits set out in Part A of Appendix 5 to the announcement (the
"Announcement") issued by Shell (the "Quantified Financial Benefits Statement"
or "the Statement"). The Statement has been made in the context of the
disclosures within Part A of Appendix 5 setting out, inter alia, the basis of
the Directors' belief (identifying the principal assumptions and sources of
information) supporting the Statement and their analysis, explanation and
quantification of the constituent elements.
Responsibilities
It is the responsibility of the Directors to prepare the Statement in
accordance with Rule 28 of the City Code on Takeovers and Mergers (the "City
Code").
It is our responsibility to form our opinion, as required by Rule 28.1(a) of
the City Code, as to whether the Statement has been properly compiled on the
basis stated.
This report is given solely for the purposes of complying with Rule 28.1(a)(i)
of the City Code and for no other purpose. Therefore to the fullest extent
permitted by law we do not assume any other responsibility to any person for
any loss suffered by any such person as a result of, arising out of, or in
connection with this report or our statement consenting to its inclusion in
the Announcement, which are required by Rule 28.1(a)(i) and Rule 23.3 of the
City Code respectively.
Basis of opinion
We conducted our work in accordance with the Standards for Investment
Reporting issued by the Auditing Practices Board in the United Kingdom.
Our work included considering whether the Statement has been accurately
computed based upon the disclosed bases of belief (including the principal
assumptions). Whilst the bases of belief (and the principal assumptions) upon
which the Statement is based are solely the responsibility of the Directors,
we considered whether anything came to our attention to indicate that any of
the bases of belief (or principal assumptions) adopted by the Directors which,
in our opinion, are necessary for a proper understanding of the Statement have
not been disclosed or if any basis of belief (or principal assumption) made by
the Directors appears to us to be unrealistic. Our work did not involve any
independent examination of any of the financial or other information
underlying the Statement.
We planned and performed our work so as to obtain the information and
explanations we considered necessary in order to provide us with reasonable
assurance that the Quantified Financial Benefits Statement has been properly
compiled on the basis stated.
Since the Statement (and the principal assumptions on which it is based)
relates to the future, the actual synergy benefits achieved are likely to be
different from those anticipated in the Statement and the differences may be
material. Accordingly, we can express no opinion as to the achievability of
the synergy benefits identified by the Directors in the Statement.
Our work has not been carried out in accordance with auditing or other
standards and practices generally accepted in jurisdictions outside the United
Kingdom, including the United States of America, and accordingly should not be
relied upon as if it had been carried out in accordance with those standards
and practices. We therefore accept no responsibility and deny any liability to
any person using this report in connection with an offering of securities who
makes a claim on the basis they had acted in reliance on the protections
afforded by United States of America law and regulation.
Opinion
In our opinion, based on the foregoing, the Quantified Financial Benefits
Statement has been properly compiled on the basis stated.
Yours faithfully
Deloitte LLP
Chartered Accountants
Deloitte LLP is a limited liability partnership registered in England and
Wales with registered number OC303675 and its registered office at 2 New
Street Square, London EC4A 3BZ, United Kingdom. Deloitte LLP is the United
Kingdom member firm of Deloitte Touche Tohmatsu Limited ("DTTL"), a UK private
company limited by guarantee, whose member firms are legally separate and
independent entities. Please see www.deloitte.co.uk/about for a detailed
description of the legal structure of DTTL and its member firms.
Part C
Report from Merrill Lynch International
The Board of Directors
Carel van Bylandtlaan 16
2596 HR The Hague
Netherlands
8 April 2015
Dear Sirs,
Firm intention to make an offer for BG Group plc by Royal Dutch Shell plc
("Shell")
We refer to the Quantified Financial Benefits Statement, the bases of belief
thereof and the notes thereto (together, the "Statement") as set out in Part A
of Appendix 5 of this Announcement, for which the Board of Directors of Shell
(the "Directors") are solely responsible under Rule 28 of the City Code on
Takeovers and Mergers (the "Code").
We have discussed the Statement (including the assumptions and sources of
information referred to therein), with the Directors and those officers and
employees of Shell who developed the underlying plans. The Statement is
subject to uncertainty as described in this Announcement and our work did not
involve an independent examination of any of the financial or other
information underlying the Statement.
We have relied upon the accuracy and completeness of all the financial and
other information provided to us by, or on behalf of, Shell, or otherwise
discussed with or reviewed by us, and we have assumed such accuracy and
completeness for the purposes of providing this letter.
We do not express any opinion as to the achievability of the quantified
financial benefits identified by the Directors.
We have also reviewed the work carried out by Deloitte LLP and have discussed
with them the opinion set out in Part B of Appendix 5 of this Announcement
addressed to yourselves and ourselves on this matter.
This letter is provided to you solely in connection with Rule 28.1(a)(ii) of
the Code and for no other purpose. We accept no responsibility to Shell or its
shareholders or any person other than the Directors in respect of the contents
of this letter; no person other than the Directors can rely on the contents of
this letter, and to the fullest extent permitted by law, we exclude all
liability (whether in contract, tort or otherwise) to any other person, in
respect of this letter, its results, or the work undertaken in connection with
this letter, or any of the results that can be derived from this letter or any
written or oral information provided in connection with this letter, and any
such liability is expressly disclaimed except to the extent that such
liability cannot be excluded by law.
On the basis of the foregoing, we consider that the Statement, for which you
as the Directors are solely responsible, has been prepared with due care and
consideration.
Yours faithfully,
Merrill Lynch International
APPENDIX 6
DEFINITIONS
"ACCC" Australian Competition and Consumer Commission
"Announcement" this Announcement made pursuant to Rule 2.7 of the City Code
"Anti-Monopoly Law" the Anti-Monopoly Law of the People's Republic of China
"Authorisations" for the purposes of the Conditions, means authorisations, orders, grants, recognitions, determinations, confirmations, consents, licences, clearances, permissions, exemptions and approvals
"Bank of America Merrill Lynch" Merrill Lynch International, a subsidiary of Bank of America Corporation
"BG" BG Group plc, incorporated in England and Wales with registered number 03690065
"BG ADRs" American Depositary Receipts, each evidencing a BG American Depositary Share, which represents one BG Share
"BG Board" the BG Directors collectively
"BG Depositary" the depositary from time to time for the BG ADRs pursuant to a deposit agreement between it, BG and the holders and beneficial owners of BG ADRs
"BG Directors" the directors of BG as at the date of this Announcement or, where the context so requires, the directors of BG from time to time
"BG General Meeting" the general meeting of BG Shareholders to be convened to consider and if thought fit pass, inter alia, a special resolution in relation to the Combination
"BG Group" BG and its Subsidiaries and subsidiary undertakings
"BG Meetings" the Court Meeting and the BG General Meeting
"BG Shareholders" the holders of BG Shares
"BG Share Plans" the BG Long-Term Incentive Plan 2008 (including the BG Deferred Bonus Plan 2008 and the BG Voluntary Bonus Deferral Plan), the BG Sharesave Plan 2008, the BG Company Share Option Scheme, the BG Share Award Plan, the BG Share Incentive Plan 2008 and the BG
Global Partnership Plan
"BG Shares" BG ordinary shares of 10 pence each
"boe(pd)" barrels of oil equivalent (per day)
"Break Payment Event" as defined in paragraph 17 of this Announcement
"Business Day" a day (other than a Saturday, Sunday, public or bank holiday) on which banks are generally open for business in London, other than solely for trading and settlement in Euro
"CADE" Brazil's Council for Economic Defence
"CCS" current cost of supply
"Circular" the circular to be sent by Shell to Shell Shareholders summarising the background to and reasons for the Combination which will include a notice convening the Shell General Meeting
"City Code" the City Code on Takeovers and Mergers
"Closing Price" the closing middle market quotations of a share derived from the Daily Official List of the London Stock Exchange
"CMA" UK Competition and Markets Authority
"Combination" the proposed acquisition of the entire issued and to be issued share capital of BG by Shell, to be effected by the Scheme as described in this document (or by the Offer under certain circumstances described in this document)
"Combined Group" the enlarged group following the Combination, comprising the Shell Group and the BG Group
"Conditions" the conditions to the implementation of the Combination set out in Part A of Appendix 2 to this Announcement and to be set out in the Scheme Document
"Consideration" the consideration payable to BG Shareholders in connection with the Combination comprising a cash component of 383 pence per BG Share and a share component of 0.4454 New Shell Shares per BG Share
"Co-operation Agreement" the agreement dated 8 April 2015 between Shell and BG and relating, among other things, to the implementation of the Combination
"Court" the High Court of Justice in England and Wales
"Court Meeting" the meeting of the BG Shareholders to be convened by order of the Court pursuant to section 896 of the Companies Act 2006 for the purpose of considering and, if thought fit, approving the Scheme (with or without amendment) and any adjournment, postponement
or reconvention thereof
"CREST" the relevant system (as defined in the Uncertificated Securities Regulations 2001 (SI 2001/3755)) in respect of which Euroclear UK & Ireland Limited is the Operator (as defined in the Regulations)
"Deloitte LLP" Deloitte LLP, the United Kingdom member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, whose member firms are legally separate and independent entities
"Disclosed" the information fairly disclosed by, or on behalf of BG: (i) in the Annual Report and Accounts of the BG Group for the financial year ended 31 December 2014; (ii) in this Announcement; (iii) in any other public announcement made by BG in accordance with
the Listing Rules, Disclosure Rules or Transparency Rules after 31 December 2014; or (iv) as disclosed in writing prior to the date of this Announcement by or on behalf of BG to Shell (or its respective officers, employees, agents or advisers in their
capacity as such)
"Dutch Revenue Service" the Dutch Revenue Service (Belastingdienst), a unit governed by the Dutch Ministry of Finance (Ministerie van Financiën) competent to impose and collect Dutch income tax (inkomstenbelasting), Dutch corporate income tax (vennootschapsbelasting) and
miscellaneous other Dutch taxes
"Effective Date" the date on which:(a) the Scheme becomes effective in accordance with its terms; or(b) if Shell elects to implement the Combination by way of an Offer, the date the Offer becomes or is declared unconditional in all respects
"EFTA" the European Free Trade Association
"EU" or "European Union" an economic and political union of 28 member states which are located primarily in Europe
"Euronext Amsterdam" Euronext in Amsterdam, a regulated market of Euronext Amsterdam N.V.
"FATA" the Australian Foreign Acquisitions and Takeovers Act 1975 (Cth)
"FCA" the Financial Conduct Authority
"kboe(pd)" thousand barrels of oil equivalent (per day)
"Listing Rules" the rules and regulations made by the FCA pursuant to Part 6 of the Financial Services and Markets Act 2000 and contained in the FCA's publication of the same name
"LNG" liquefied natural gas
"London Stock Exchange" London Stock Exchange plc
"Long Stop Date" 31 July 2016 or such later date as may be agreed in writing by BG and Shell (with the Panel's consent and as the Court may approve (if such approval is required))
"mboe" million barrels of oil equivalent
"Mix and Match Facility" the mix and match facility under which BG Shareholders may, subject to countervailing elections made by other BG Shareholders, elect to vary the proportion of New Shell Shares and cash received under the terms of the Combination
"MOFCOM" the Ministry of Commerce of the People's Republic of China
"mtpa" million tonnes per annum
"New Shell Shares" the Shell B Shares to be issued and, subject to a valid election to that effect by a BG Shareholder (or if it is no longer possible to issue Shell B Shares and subject to paragraphs 13, 17 and 27 of this Announcement and the provisions of the Co-operation
Agreement) the Shell A Shares to be issued pursuant to the Combination
"Offer" should the Combination be implemented by way of a takeover offer as defined in Chapter 3 of Part 28 of the Companies Act 2006 in the circumstances described in this Announcement, the offer to be made by or on behalf of Shell to acquire the entire issued
and to be issued share capital of BG and, where the context admits, any subsequent revision, variation, extension or renewal of such offer
"Offer Document" should the Combination be implemented by means of the Offer, the document to be sent to BG Shareholders which will contain, inter alia, the terms and conditions of the Offer
"Offer Period" the period commencing on 7 April 2015 and ending on: (i) the earlier of the date on which the Scheme becomes effective and/or the date on which the Scheme lapses or is withdrawn (or such other date as the Panel may decide); or (ii) the earlier of the date
on which the Offer has become or has been declared unconditional as to acceptances and/or the date on which the Offer lapses or is withdrawn (or such other date as the Panel may decide), in each case other than where such lapsing or withdrawal is a result
of Shell exercising its right to implement the Combination by way of an Offer or a Scheme (as appropriate)
"Official List" the official list maintained by the UK Listing Authority
"Opening Position Disclosure" an announcement containing details of interests or short positions in, or rights to subscribe for, any relevant securities of a party to the offer if the person concerned has such a position
"Overseas Shareholders" Scheme Shareholders who are resident in, ordinarily resident in, or citizens of, jurisdictions outside the United Kingdom
"Panel" the Panel on Takeovers and Mergers
"Pre-Conditions" the pre-conditions to the Combination, as set out in Appendix 1 to this Announcement
"PRMS" Petroleum Resources Management System
"Prospectus" the prospectus document to be published by Shell at the same time as the Scheme Document in respect of the New Shell Shares to be issued to BG Shareholders in connection with the Combination and for the purpose of admission of the New Shell Shares to the
Official List and to Euronext Amsterdam
"Quantified Financial Benefits Statement" as defined in Part A of Appendix 5 to this Announcement
"Regulation" Council Regulation (EC) 139/2004 (as amended)
"Regulatory Conditions" the Conditions set out in paragraphs (b) to (k) (inclusive) of Part A of Appendix 2 (so far as, in the case of the Conditions set out in paragraphs (i), (j) and (k) of Part A of Appendix 2, the relevant Third Party under those Conditions is a Relevant
Authority, as defined in the Co-operation Agreement)
"Restricted Jurisdiction" any jurisdiction where local laws or regulations may result in a significant risk of civil, regulatory or criminal exposure if information concerning the Combination is sent or made available to BG Shareholders in that jurisdiction
"Scheme" the proposed scheme of arrangement under Part 26 of the Companies Act 2006 between BG and BG Shareholders to implement the Combination with or subject to any modification, addition or condition approved or imposed by the Court
"Scheme Court Hearing" the hearing of the Court to sanction the Scheme under section 899 of the Companies Act 2006
"Scheme Court Order" the order of the Court sanctioning the Scheme under section 899 of the Companies Act 2006
"Scheme Document" the document to be dispatched to BG Shareholders including the particulars required by section 897 of the Companies Act 2006
"Scheme Record Time" the time and date specified as such in the Scheme Document or such later time as BG and Shell may agree
"Scheme Shareholder" holders of Scheme Shares
"Scheme Shares" 1. the BG Shares in issue at the date of the Scheme Document;2. any BG Shares issued after the date of the Scheme Document and prior to the Voting Record Time; and3. any BG Shares issued at or after the Voting Record Time and prior to the Scheme
Record Time in respect of which the original or any subsequent holder thereof is bound by the Scheme, or shall by such time have agreed in writing to be bound by the Scheme,in each case excluding any BG Shares held in treasury
"SEC" the US Securities and Exchange Commission
"Shell" Royal Dutch Shell plc, incorporated in England and Wales with registered number 04366849
"Shell A Shares" Shell A ordinary shares of E0.07 each
"Shell B Shares" Shell B ordinary shares of E0.07 each
"Shell Board" the Shell Directors collectively
"Shell Directors" the directors of Shell as at the date of this Announcement or, where the context so requires, the directors of Shell from time to time
"Shell General Meeting" the general meeting of Shell to be convened in connection with the Combination, notice of which will be sent to the Shell Shareholders, including any adjournment thereof
"Shell Group" Shell and its Subsidiaries and subsidiary undertakings
"Shell Resolutions" the ordinary shareholder resolutions of Shell to approve, effect and implement the Combination and to grant authority to the Shell Directors to allot the New Shell Shares
"Shell Shareholders" holders of Shell A Shares or Shell B Shares
"Shell Transport" The Shell Transport and Trading Company Limited
"Subsidiary" has the meaning given in section 1159 of the Companies Act 2006
"subsidiary undertaking" has the meaning given in section 1162 of the Companies Act 2006
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland
"UK Listing Authority" the FCA acting in its capacity as the authority for listing in the UK
"US" or "United States" the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia
"US Exchange Act" the US Securities Exchange Act of 1934, as amended
"US Securities Act" the US Securities Act of 1933, as amended
"Voting Record Time" 6.00 p.m. on the day which is two days prior to the date of the Court Meeting or any adjournment thereof (as the case may be)
"Wider BG Group" has the meaning given in Appendix 2
"Wider Shell Group" has the meaning given in Appendix 2
All times referred to are London time unless otherwise stated.
All references to "GBP", "pence", "sterling" or "£" are to the lawful currency
of the United Kingdom.
All references to "Euro" or "E" are to the lawful currency of the European
Union.
All references to "US dollar", "USD", "US$" or "cents", are to the lawful
currency of the United States.
All references to statutory provision or law or to any order or regulation
shall be construed as a reference to that provision, law, order or regulation
as extended, modified, replaced or re-enacted from time to time and all
statutory instruments, regulations and orders from time to time made
thereunder or deriving validity therefrom.
1 The issue of Shell B Shares is subject to the continuing validity of the
Dutch Revenue Service's consent described in paragraph 13 of this
Announcement, such consent being conditional on the Combination being
implemented pursuant to a scheme of arrangement. If Shell were to implement
the Combination by way of a takeover offer in the specific circumstances set
out in paragraphs 13 and 27 of this Announcement, the share component of the
Consideration would comprise Shell A Shares only and BG Shareholders would be
entitled to receive 0.4454 Shell A Shares and 383 pence in cash per BG Share.
2 Based on Shell's proved oil and gas reserves calculated on an SEC basis
for the financial year ended 31 December 2014 of 13,081 mboe and BG's proved
oil and gas reserves calculated on a PRMS basis for the same period of 3,612
mboe. Please see paragraph 15 of Appendix 3 for further information.
3 BG Shareholders will be entitled to receive each Shell dividend for which
the record date falls after completion of the Combination.
4 Subject to progress with debt reduction and Brent oil prices recovering
towards the middle of Shell's long term planning range of $70-$90-$110 per
barrel. Shell intends to buy back the cheaper of the Shell A and Shell B
Shares from a Shell perspective.
5 These ranges are not intended to be capable of being aggregated to form a
cash flow target for the Combined Group, and assume Brent oil prices return to
around the middle of Shell's long term planning range. These statements should
not be construed as profit forecasts and are not subject to the requirements
of Rule 28 of the City Code.
6 Per share impacts assume Brent oil prices 2016 $67/bbl; 2017 $75/bbl;
2018-2020 $90/bbl (all on a 2014 real terms basis) and completion of the
Combination in early 2016. The statements that the Combination is expected to
be accretive to cash flow from operations per share and to earnings per share,
or that the effect on return on average capital employed is expected to be
neutral in 2018, should not be construed as profit forecasts and are therefore
not subject to the requirements of Rule 28 of the Code. Such statements should
not be interpreted to mean that cash flow from operations and earnings per
share, or income on a clean current cost of supply basis, in any future
financial period will necessarily match or be greater than those for the
relevant preceding financial period.
7 The issue of Shell B Shares is subject to the continuing validity of the
Dutch Revenue Service's consent described in paragraph 13 of this
Announcement, such consent being conditional on the Combination being
implemented pursuant to a scheme of arrangement. If Shell were to implement
the Combination by way of a takeover offer in the specific circumstances set
out in paragraphs 13 and 27 of this Announcement, the share component of the
Consideration would comprise Shell A Shares only and BG Shareholders would be
entitled to receive 0.4454 Shell A Shares and 383 pence in cash per BG Share.
8 Based on Shell's proved oil and gas reserves calculated on an SEC basis
for the financial year ended 31 December 2014 of 13,081 mboe and BG's proved
oil and gas reserves calculated on a PRMS basis for the same period of 3,612
mboe. Please see paragraph 15 of Appendix 3 for further information.
9 These ranges are not intended to be capable of being aggregated to form a
cash flow target for the Combined Group, and assume Brent oil prices return to
around the middle of Shell's long term planning range. These statements should
not be construed as profit forecasts and are not subject to the requirements
of Rule 28 of the City Code.
10 Per share impacts assume Brent oil prices 2016 $67/bbl; 2017 $75/bbl;
2018-2020 $90/bbl (all on a 2014 real terms basis) and completion of the
Combination in early 2016. The statements that the Combination is expected to
be accretive to cash flow from operations per share and to earnings per share,
or that the effect on return on average capital employed is expected to be
neutral in 2018, should not be construed as profit forecasts and are therefore
not subject to the requirements of Rule 28 of the Code. Such statements should
not be interpreted to mean that cash flow from operations and earnings per
share, or income on a clean current cost of supply ("CCS)" basis, in any
future financial period will necessarily match or be greater than those for
the relevant preceding financial period.
11 Business performance excludes discontinued operations and disposals,
certain re-measurements and impairments and certain other exceptional items as
exclusion of these items provides a clear and consistent presentation of the
underlying operating performance of the BG Group's on-going business. After
disposals, re-measurements and impairments, BG generated total revenue and
other operating income of $19,949 million and a total loss before tax of
$2,330 million, each for the year ended 31 December 2014.
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