REG-Royal Dutch Shell: Recommended Cash & Share Offer for BG Group by Shell PLC <Origin Href="QuoteRef">RDSa.L</Origin> - Part 1

ShellAnnouncement

08/04/2015 07:22

Not for release, publication or distribution, in whole or in part, in or into
any jurisdiction where to do so would constitute a violation of the relevant
laws of such jurisdictioN

THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS OR
PROSPECTUS EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY INVESTMENT
DECISION IN RELATION TO THE NEW SHELL SHARES EXCEPT ON THE BASIS OF THE
INFORMATION IN THE SCHEME DOCUMENT, THE PROSPECTUS AND THE CIRCULAR WHICH ARE
PROPOSED TO BE PUBLISHED IN DUE COURSE

FOR IMMEDIATE RELEASE

8 April 2015

RECOMMENDED CASH AND SHARE OFFER FOR BG GROUP PLC BY ROYAL DUTCH SHELL PLC

Summary

The Boards of Shell and BG are pleased to announce that they have reached
agreement on the terms of a recommended cash and share offer to be made by
Shell for the entire issued and to be issued share capital of BG.

  * Under the terms of the Combination, BG Shareholders will be entitled to
    receive:
   
For each BG Share: 383 pence in cash; and

0.4454 Shell B Shares1

  * Based on the 90 trading day volume weighted average price of 2,170.3 pence
    per Shell B Share on 7 April 2015 (being the last Business Day before the
    date of this Announcement), the terms of the Combination represent:
   
- a value of approximately 1,350 pence per BG Share; and

- a premium of approximately 52% to the 90 trading day volume weighted average
price of 890.4 pence per BG Share on 7 April 2015.

 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.
   

  * Based on the Closing Price of 2,208.5 pence per Shell B Share on 7 April
    2015 (being the last Business Day before the date of this Announcement),
    the terms of the Combination represent:
   
- a value of approximately 1,367 pence per BG Share;

- a premium of approximately 50% to the Closing Price of 910.4 pence per BG
Share on 7 April 2015; and

- a value of approximately £47.0 billion for BG's entire issued and to be
issued share capital.

  * The Combination will result in BG Shareholders owning approximately 19% of
    the Combined Group.
   
  * Shell expects the Combination to accelerate its growth strategy in global
    LNG and deep water.
   
  * The Combination will add some 25% to Shell's proved oil and gas reserves2
    and 20% to production, each on a 2014 basis, and provide Shell with
    enhanced positions in competitive new oil and gas projects, particularly in
    Australia LNG and Brazil deep water.
   
  * The Combination has the potential to unlock further value for both sets of
    shareholders from the combined portfolio. An enhanced set of upstream
    positions will be a springboard to high-grade the Combined Group's longer
    term portfolio, increase asset sales and reduce capital investment, thereby
    enhancing the Combined Group's capacity to pay dividends and undertake
    share buybacks.
   
  * Shell expects the Combination to generate pre-tax synergies of
    approximately $2.5 billion per annum (which have been reported on) and has
    also identified further significant opportunities.
   
  * In the near term, BG Shareholders will benefit from the dividends enjoyed
    by Shell Shareholders3. Shell today confirms its intention to pay dividends
    of $1.88 per ordinary share in 2015 and at least that amount in 2016.
   
  * In the medium term, all shareholders will benefit from the potential for
    enhanced cash flow and a continued drive to grow returns and enhance
    capital efficiency from the combined portfolio.
   
 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.

   
  * Shell expects to commence a share buyback programme in 2017 of at least $25
    billion for the period 2017 to 20204. Shell expects this programme to
    offset the shares issued under the Shell scrip dividend programme and to
    significantly reduce the equity issued in connection with the Combination.
   
Commenting on today's announcement, Jorma Ollila, Chairman of Shell said:

"This is an important transaction for Shell, accelerating the delivery of our
strategy for shareholders. The result will be a more competitive, stronger
company for both sets of shareholders in today's volatile oil price world.

BG shareholders will receive significant value through the premium being
offered for their shares. They will become shareholders in Shell, accessing an
attractive dividend policy, a share in the significant synergies and the
compelling upside and enhanced operating capability of the combined group.

We believe that the combination is in the interests of both our companies and
their shareholders."

Commenting on the Combination, Ben van Beurden, CEO of Shell said:

"Bold, strategic moves shape our industry. BG and Shell are a great fit. This
transaction fits with our strategy and our read on the industry landscape
around us.

At the start of 2014, Shell embarked on an improvement programme, including
divestments and the restructuring of underperforming businesses, whilst at the
same time delivering profitable new projects for shareholders. This programme
is delivering, at the bottom line.

BG will accelerate Shell's financial growth strategy, particularly in deep
water and liquefied natural gas: two of Shell's growth priorities and areas
where the company is already one of the industry leaders. Furthermore, the
addition of BG's competitive natural gas positions makes strategic sense, ahead
of the long-term growth in demand we see for this cleaner-burning fuel.

This transaction will be a springboard for a faster rate of portfolio change,
particularly in exploration and other long term plays. We will be concentrating
on fewer themes, and at a larger scale, to drive profitability and balance
risk, and unlock more value from the combined portfolios.

Over time, the combination will enhance our free cash flow potential, and our
capacity to undertake share buybacks, where I expect to see a substantial
increase in pace."

 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.
   

Commenting on the Combination, Andrew Gould, Chairman of BG said:

"This offer represents an attractive return for BG shareholders. BG has a
strong portfolio of operations including growth assets in Australia and Brazil
and a highly competitive LNG business, as well as an enviable track record of
exploration success. The BG Board remains confident in BG's long-term prospects
under the leadership of Helge Lund. Shell's offer, however, allows us to
accelerate and de-risk the delivery of this value. The structure of the offer
will provide BG shareholders with an attractive premium and a substantial cash
return as well as enabling them, if they wish, to participate in the benefits
of the combination through the share component. For these reasons, the BG Board
recommends the offer."

Commenting on the Combination, Helge Lund, CEO of BG said:

"The offer from Shell delivers attractive returns to shareholders and has
strong strategic logic. BG's deep water positions and strengths in exploration,
liquefaction and LNG shipping and marketing will combine well with Shell's
scale, development expertise and financial strength. The consolidated business
will be strongly placed to develop the growth projects in BG's portfolio. The
transaction will take time to complete, during which my team and I will remain
committed to BG and our shareholders, and to safely delivering our 2015
business plan."

  * It is intended that the Combination will be implemented by way of a
    court-sanctioned scheme of arrangement under Part 26 of the Companies Act
    2006, further details of which are contained in the full text of this
    Announcement. However, Shell reserves the right to implement the
    Combination by way of a takeover offer (as defined in Part 28 of the
    Companies Act 2006), subject to the Panel's consent and the terms of the
    Co-operation Agreement.
   
  * The Boards of Shell and BG have agreed that BG Shareholders will continue
    to be entitled to receive their final dividend for 2014 of 14.37 cents
    (9.52 pence) per BG Share which has already been announced by BG, as well
    as an interim dividend in respect of the six month period up to 30 June
    2015 of not more than the interim dividend in respect of the six month
    period up to 30 June 2014 of 14.38 cents per BG Share. In addition, should
    completion of the Combination occur after the record date for Shell's 2015
    fourth quarter interim dividend, BG Shareholders would be entitled to
    receive a further BG dividend in respect of 2015 of not more than the final
    dividend for 2014 of 14.37 cents per BG Share. If, however, completion of
    the Combination occurs prior to the record date for Shell's 2015 fourth
    quarter interim dividend, BG Shareholders would receive that Shell dividend
    and would not receive a further BG dividend for 2015.
   
  * BG Shareholders will be entitled to elect to receive the share component of
    the Consideration in the form of Shell A Shares, as opposed to Shell B
    Shares, at the same exchange ratio.
   
  * Shell will also provide a Mix and Match Facility, which will allow BG
    Shareholders to elect, subject to off-setting elections, to vary the
    proportions in which they receive New Shell Shares and cash. The Mix and
    Match Facility will not change the total number of New Shell Shares to be
    issued or the maximum amount of cash that will be paid under the terms of
    the Combination.
   
  * The BG Directors, who have been so advised by Goldman Sachs International
    and Robey Warshaw LLP, consider the financial terms of the Combination to
    be fair and reasonable. In providing advice to the BG Directors, Goldman
    Sachs International and Robey Warshaw LLP have taken into account the
    commercial assessments of the BG Directors.
   
  * Accordingly, the BG Directors intend unanimously to recommend that BG
    Shareholders vote in favour of the Scheme at the Court Meeting and the
    resolutions relating to the Combination at the BG General Meeting, as they
    have irrevocably undertaken to do in respect of their own beneficial
    holdings of 217,564 BG Shares representing, in aggregate, approximately
    0.006% of BG's issued share capital on 7 April 2015, being the last
    Business Day before the date of this Announcement. Further details of these
    irrevocable undertakings are set out in Appendix 4 to this Announcement.
   
  * The Combination will be put to the vote of Shell Shareholders as a Class 1
    transaction for Shell for the purposes of the Listing Rules. The Shell
    Directors consider the Combination to be in the best interests of Shell and
    the Shell Shareholders as a whole and intend unanimously to recommend that
    Shell Shareholders vote in favour of the Shell Resolutions to be proposed
    at the Shell General Meeting which will be convened in connection with the
    Combination.
   
  * The Shell Directors have received financial advice from Bank of America
    Merrill Lynch in relation to the Combination. In providing their advice to
    the Shell Directors, Bank of America Merrill Lynch has relied upon the
    Shell Directors' commercial assessment of the Combination.
   
  * The Combination will be subject to the Pre-Conditions set out in Appendix
    1, the Conditions and certain further terms set out in Appendix 2 and to
    the full terms and conditions which will be set out in the Scheme Document
    including the sanction of the Scheme by the Court and the approval of Shell
    Shareholders. The Pre-Conditions and Conditions include the receipt of
    various antitrust and foreign investment approvals, other regulatory
    consents and waivers of any termination rights, pre-emption rights, rights
    of first refusal or similar rights in a number of jurisdictions, as further
    described in paragraph 8 of this Announcement.
   
  * The Scheme Document will include full details of the Scheme, together with
    notices of the Court Meeting and the BG General Meeting and the expected
    timetable, and will specify the action to be taken by Scheme Shareholders.
    It is expected that the Scheme Document will be despatched to BG
    Shareholders towards the end of 2015 or in early 2016, and no later than 28
    days after the date on which the Pre-Conditions are satisfied and/or
    waived, as applicable, save as the Panel may otherwise permit.
   
  * It is expected that the Prospectus, containing information about the New
    Shell Shares, will be published at the same time as the Scheme Document is
    posted to BG Shareholders. It is also expected that the Circular,
    containing details of the Combination and notice of the Shell General
    Meeting, will be posted to Shell Shareholders at the same time as the
    Scheme Document is posted to BG Shareholders, with the Shell General
    Meeting being held at or around the same time as the BG Meetings.
   
  * The Scheme is expected to become effective in early 2016, subject to the
    satisfaction or waiver of the Pre-Conditions set out in Appendix 1 and the
    Conditions and certain further terms set out in Appendix 2 to this
    Announcement.
   
Summary of strategic fit and financial returns

  * BG is highly complementary with Shell's strategic priorities of deep water
    and LNG.
   
  * By applying its capabilities to the BG assets, Shell believes that, by
    around 2020, the Combined Group will have5:
   
  * 
      + two strategic growth businesses - deep water and integrated gas - that
        could potentially each generate $15-$20 billion of cash flow from
        operations per annum;
       
      + upstream and downstream engines that could potentially generate a
        further combined $15-$20 billion of cash flow from operations per annum
        in total; and
       
      + long-term positions which could potentially add around a further $10
        billion of cash flow from operations per annum.
       
  * Shell expects the Combination to be mildly accretive to earnings per share
    in 2017 and strongly accretive to earnings per share from 2018 onwards, on
    a current cost of supply basis and excluding identified items6.
   
  * Shell expects the Combination to be accretive to cash flow from operations
    per share from 20166.
   
  * The Combination would have reduced Shell's return on average capital
    employed by around 1.5%, on a 2014 pro-forma basis, but Shell expects the
    effect on return on average capital employed to be neutral from 2018, with
    potential for growth in returns thereafter, assuming flat oil prices6.
   
  * Shell expects asset sales to increase and to total $30 billion for the
    period 2016 to 2018.
   
  * Shell's appraisal of BG is based on an intrinsic asset value assessment
    across a range of oil prices and on the strong cash flow growth potential
    of the Combined Group.
   
  * The Combined Group's priorities for cash will be (1) debt reduction; (2)
    dividends; and (3) share buybacks and capital investment.
   
 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.

   
  * Shell plans to pay down debt from 2016 in order to maintain a strong
    balance sheet and credit rating to underpin its business model.
   
  * Balance sheet gearing would have been approximately 20% for the Combined
    Group on a 2014 pro-forma basis.
   
This summary should be read in conjunction with, and is subject to, the full 
text of this Announcement (including the Appendices). The Combination will be
subject to the Pre-Conditions set out in Appendix 1, the Conditions and certain
further terms set out in Appendix 2 and to the full terms and conditions which
will be set out in the Scheme Document. Appendix 3 contains sources and bases 
of certain information contained in this Announcement. Details of irrevocable
undertakings received by Shell are set out in Appendix 4. Appendix 5 contains
information relating to the Quantified Financial Benefits Statement made in 
this Announcement and the reports of Shell's reporting accountant and financial
adviser. Appendix 6 contains the definitions of certain terms used in this
Announcement.

For the purposes of Rule 28 of the City Code, the Quantified Financial Benefits
Statement contained in this Announcement is the responsibility of Shell and the
Shell Directors. Any statement of intention, belief or expectation for the
Combined Group following the Effective Date is an intention, belief or
expectation of the Shell Directors and not of the BG Directors.

Analyst and investor presentations

Shell will be presenting (together with the Chairman of BG) to investors and
analysts on the Combination at 9.00-11.00 and 15.00-17.00 UK time today.

There will also be live webcasts of these presentations. Information on how to
access the live audio webcast can be found at www.shell.com and
www.bg-group.com.

Subject to certain restrictions, the recorded presentation and the accompanying
slides will be available to all interested parties at www.shell.com and
www.bg-group.com. Your attention is also drawn to the important information at
the back of this Announcement.

Enquiries:

Shell

Media

Shell International Media Relations +44 207 934 5550
Shell Americas Media Relations +1 713 241 4544

Investors

Shell International Investor Relations +31 70 377 4540
Shell North America Investor Relations +1 832 337 2034

Shell financial adviser - Bank of America Merrill Lynch

Simon Mackenzie Smith +44 20 7628 1000
Julian Mylchreest

Shell communications adviser - Finsbury

James Murgatroyd +44 20 7251 3801
Dorothy Burwell

BG

Media

Lachlan Johnston +44 118 929 2942
Kim Blomley +44 118 938 6568
Out of Hours Media Mobile +44 7917 185 707

Investors

Mark Lidiard +44 118 929 2079
Siobhán Andrews +44 118 929 3171
Ian Wood +44 118 929 3829
Investor Relations +44 118 929 3025

BG financial advisers

Goldman Sachs International

Karen Cook +44 20 7774 1000
Mark Sorrell

Robey Warshaw LLP

Simon Robey +44 20 7317 3900
Simon Warshaw

BG communications adviser - Brunswick

Mike Harrison +44 20 7404 5959

Important notices relating to financial advisers

Merrill Lynch International, a subsidiary of Bank of America Corporation, which
is authorised by the Prudential Regulation Authority and regulated by the FCA
and the Prudential Regulation Authority in the UK, is acting exclusively for
Shell and no one else in connection with the Combination and will not be
responsible to anyone other than Shell for providing the protections afforded
to its clients or for providing advice in relation to the Combination or any
other matters referred to in this Announcement.

Goldman Sachs International, which is authorised by the Prudential Regulation
Authority and regulated by the FCA and the Prudential Regulation Authority in
the UK, is acting for BG and no one else in connection with the matters
referred to in this Announcement and will not be responsible to anyone other
than BG for providing the protections afforded to its clients, or for giving
advice in connection with any matter referred to in this Announcement.

Robey Warshaw LLP, which is authorised and regulated by the FCA in the UK, is
acting as financial adviser exclusively for BG and no one else in connection
with the matters referred to in this Announcement and will not regard any other
person as its client in relation to the matters referred to in this
Announcement and will not be responsible to anyone other than BG for providing
the protections afforded to its clients, nor for providing advice in relation
to the matters referred to in this Announcement.

Further information

This Announcement is not intended to and does not constitute or form part of
any offer to sell or subscribe for or any invitation to purchase or subscribe
for any securities or the solicitation of any vote or approval in any
jurisdiction pursuant to the Combination or otherwise nor shall there be any
sale, issuance or transfer of securities of Shell or BG pursuant to the
Combination in any jurisdiction in contravention of applicable laws. The
Combination will be implemented solely pursuant to the terms of the Scheme
Document, which will contain the full terms and conditions of the Combination,
including details of how to vote in respect of the Combination. Any decision in
respect of, or other response to, the Combination should be made only on the
basis of the information contained in the Scheme Document.

This Announcement does not constitute a prospectus or prospectus equivalent
document.

Information relating to BG Shareholders

Please be aware that addresses, electronic addresses and certain other
information provided by BG Shareholders, persons with information rights and
other relevant persons for the receipt of communications from BG may be
provided to Shell during the Offer Period as required under Section 4 of
Appendix 4 of the City Code.

Overseas jurisdictions

The release, publication or distribution of this Announcement in jurisdictions
other than the United Kingdom may be restricted by law and therefore any
persons who are subject to the laws of any jurisdiction other than the United
Kingdom should inform themselves about, and observe any applicable
requirements. In particular, the ability of persons who are not resident in the
United Kingdom to vote their BG Shares with respect to the Scheme at the Court
Meeting, or to execute and deliver forms of proxy appointing another to vote at
the Court Meeting on their behalf, may be affected by the laws of the relevant
jurisdictions in which they are located. This Announcement has been prepared
for the purpose of complying with English law and the City Code and the
information disclosed may not be the same as that which would have been
disclosed if this Announcement had been prepared in accordance with the laws of
jurisdictions outside the United Kingdom.

Unless otherwise determined by Shell or required by the City Code, and
permitted by applicable law and regulation, the Combination will not be made
available, directly or indirectly, in, into or from a Restricted Jurisdiction
where to do so would violate the laws in that jurisdiction and no person may
vote in favour of the Combination by any such use, means, instrumentality or
form within a Restricted Jurisdiction or any other jurisdiction if to do so
would constitute a violation of the laws of that jurisdiction. Accordingly,
copies of this Announcement and any formal documentation relating to the
Combination are not being, and must not be, directly or indirectly, mailed or
otherwise forwarded, distributed or sent in or into or from any Restricted
Jurisdiction and persons receiving such documents (including custodians,
nominees and trustees) must not mail or otherwise forward, distribute or send
them in or into or from any Restricted Jurisdiction. If the Combination is
implemented by way of an Offer (unless otherwise permitted by applicable law
and regulation), the Offer may not be made directly or indirectly, in or into,
or by the use of mails or any means or instrumentality (including, but not
limited to, facsimile, e-mail or other electronic transmission, telex or
telephone) of interstate or foreign commerce of, or of any facility of a
national, state or other securities exchange of any Restricted Jurisdiction and
the Offer may not be capable of acceptance by any such use, means,
instrumentality or facilities.

The availability of New Shell Shares under the Combination to BG Shareholders
who are not resident in the United Kingdom may be affected by the laws of the
relevant jurisdictions in which they are resident. Persons who are not resident
in the United Kingdom should inform themselves of, and observe, any applicable
legal or regulatory requirements.

Further details in relation to BG Shareholders in overseas jurisdictions will
be contained in the Scheme Document.

Additional US information

The Combination relates to the shares of a UK company and is subject to UK
procedural and disclosure requirements that are different from those of the US.
Any financial statements or other financial information included in this
Announcement may have been prepared in accordance with non-US accounting
standards that may not be comparable to the financial statements of US
companies or companies whose financial statements are prepared in accordance
with generally accepted accounting principles in the US. It may be difficult
for US holders of shares to enforce their rights and any claims they may have
arising under the US federal securities laws in connection with the
Combination, since Shell and BG are located in a country other than the US, and
some or all of their officers and directors may be residents of countries other
than the United States. US holders of shares in BG or Shell may not be able to
sue Shell, BG or their respective officers or directors in a non-US court for
violations of US securities laws. Further, it may be difficult to compel Shell,
BG and their respective affiliates to subject themselves to the jurisdiction or
judgment of a US court.

Investors should be aware that Shell may purchase or arrange to purchase BG
Shares otherwise than under any takeover offer or scheme of arrangement related
to the Combination, such as in open market or privately negotiated purchases.

The Combination may be implemented under a scheme of arrangement provided for
under English company law. If so, it is expected that any securities to be
issued under the Combination would be issued in reliance upon the exemption
from the registration requirements of the US Securities Act, provided by
Section 3(a)(10) thereof and also would not be subject to the tender offer
rules under the US Exchange Act.

The Combination may, in the circumstances provided for in this Announcement, be
implemented by way of a takeover offer under English law. If so, any securities
to be issued under the Combination may be issued in reliance upon the exemption
from the registration requirements of the US Securities Act provided by Rule
802 thereunder. Alternatively, any securities to be issued under the
Combination may be registered under the US Securities Act. If the Combination
is implemented by way of takeover offer, it will be done in compliance with the
applicable rules under the US Exchange Act, including any applicable exemptions
provided under Rules 14d-1(c) and 14d-1(d) thereunder.

BG Shareholders and holders of BG ADRs are urged to read any documents related
to the Combination filed, furnished or to be filed or furnished with the SEC
because they will contain important information regarding the Combination and
any related offer of securities. Such documents will be available free of
charge at the SEC's web site at www.sec.gov and from Shell at www.shell.com.
Nothing in this Announcement shall be deemed an acknowledgement that any SEC
filing is required or that an offer requiring registration under the US
Securities Act may ever occur in connection with the Combination.

Cautionary note regarding forward looking statements

This Announcement contains certain forward looking statements with respect to
the financial condition, results of operations and businesses of Shell and BG
and their respective Groups, and certain plans and objectives of Shell with
respect to the Combined Group. All statements other than statements of
historical fact are, or may be deemed to be, forward looking statements.
Forward looking statements are statements of future expectations that are based
on management's current expectations and assumptions and involve known and
unknown risks and uncertainties that could cause actual results, performance or
events to differ materially from those expressed or implied in these
statements. Forward looking statements include, among other things, statements
concerning the potential exposure of Shell, BG and the Combined Group to market
risks and statements expressing management's expectations, beliefs, estimates,
forecasts, projections and assumptions, including as to future potential cost
savings, synergies, earnings, cash flow, return on average capital employed,
production and prospects. These forward looking statements are identified by
their use of terms and phrases such as "anticipate", "believe", "could",
"estimate", "expect", "goals", "intend", "may", "objectives", "outlook",
"plan", "probably", "project", "risks", "seek", "should", "target", "will" and
similar terms and phrases.

There are a number of factors that could affect the future operations of Shell,
BG and the Combined Group and that could cause results to differ materially
from those expressed in the forward looking statements included in this
Announcement, including (without limitation): (a) price fluctuations in crude
oil and natural gas; (b) changes in demand for Shell, BG and the Combined
Group's products; (c) currency fluctuations; (d) drilling and production

results; (e) reserves estimates; (f) loss of market share and industry
competition; (g) environmental and physical risks; (h) risks associated with
the identification of suitable potential acquisition properties and targets,
and successful negotiation and completion of such transactions; (i) the risk of
doing business in developing countries and countries subject to international
sanctions; (j) legislative, fiscal and regulatory developments including
regulatory measures addressing climate change; (k) economic and financial
market conditions in various countries and regions; (l) political risks,
including the risks of expropriation and renegotiation of the terms of
contracts with governmental entities, delays or advancements in the approval of
projects and delays in the reimbursement for shared costs; and (m) changes in
trading conditions.

All forward looking statements contained in this Announcement are expressly
qualified in their entirety by the cautionary statements contained or referred
to in this section. Readers should not place undue reliance on forward looking
statements. Additional risk factors that may affect future results are
contained in Shell's Form 20-F for the year ended 31 December 2014 (available
at www.shell.com/investor and www.sec.gov). These risk factors expressly
qualify all forward looking statements contained in this Announcement and
should also be considered by the reader.

For a discussion of important factors which could cause actual results to
differ from forward looking statements relating to BG and the BG Group, refer
to BG's Annual Report and Accounts for the year ended 31 December 2014.

Each forward looking statement speaks only as of the date of this Announcement.
None of Shell, the Shell Group, BG or the BG Group undertakes any obligation to
publicly update or revise any forward looking statement as a result of new
information, future events or otherwise, except to the extent legally required.
In light of these risks, results could differ materially from those stated,
implied or inferred from the forward looking statements contained in this
Announcement.

Rounding

Certain figures included in this Announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of the figures that precede them.

No forecasts or estimates

No statement in this Announcement (including any statement of estimated
synergies) is intended as a profit forecast or estimate for any period and no
statement in this Announcement should be interpreted to mean that cash flow
from operations, free cash flow, earnings, earnings per share or income on a
clean current cost of supply ("CCS") basis for Shell, BG or the Combined Group,
as appropriate, for the current or future financial years would necessarily
match or exceed the historical published cash flow from operations, free cash
flow, earnings, earnings per share or income on a clean CCS basis for Shell or
BG as appropriate.

Quantified financial benefits

The statements in the Quantified Financial Benefits Statement relate to future
actions and circumstances which, by their nature, involve risks, uncertainties
and contingencies. The synergies and cost savings referred to may not be
achieved, or may be achieved later or sooner than estimated, or those achieved
could be materially different from those estimated. For the purposes of Rule 28
of the City Code, the Quantified Financial Benefits Statement contained in this
Announcement is the responsibility of Shell and the Shell Directors.

Rule 2.10 information

In accordance with Rule 2.10 of the City Code, Shell confirms that, as at the
date of this Announcement, it has the following relevant securities held and in
issue outside treasury: 3,894,584,881 A ordinary shares of €0.07 each, with
ISIN reference GB00B03MLX29; and 2,440,410,614 B ordinary shares of €0.07 each,
with ISIN reference GB00B03MM408, each admitted to trading on the main market
of the London Stock Exchange and on Euronext Amsterdam. The total number of
Shell A ordinary shares and B ordinary shares held and in issue outside
treasury is 6,334,995,495. Shell has A and B American Depositary Shares (ADSs)
listed on the New York Stock Exchange. The Bank of New York Mellon acts as
depositary. Each A ADS represents two A ordinary shares of €0.07 each and each
B ADS represents two B ordinary shares of €0.07 each. The Shell A ADSs have the
trading symbol RDS.A and ISIN US7802592060 and the Shell B ADSs have the
trading symbol RDS.B and ISIN US7802591070.

In accordance with Rule 2.10 of the City Code, BG confirms that, as at the date
of this Announcement, it has the following relevant securities held and in
issue outside treasury: 3,414,440,911 ordinary shares of 10 pence each that are
admitted to trading on the main market of the London Stock Exchange. The ISIN
for BG's ordinary shares is GB0008762899. BG has a sponsored Level 1 American
Depositary Receipts (ADR) programme. Each ADR represents one BG ordinary share.
The ADRs trade in the over-the-counter market, OTCQX International Premier. The
trading symbol for these securities is BRGYY and the ISIN is US0554342032.

Disclosure requirements of the City Code

Under Rule 8.3(a) of the City Code, any person who is interested in 1% or more
of any class of relevant securities of an offeree company or of any securities
exchange offeror (being any offeror other than an offeror in respect of which
it has been announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement of the
offer period and, if later, following the announcement in which any securities
exchange offeror is first identified. An Opening Position Disclosure must
contain details of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm
(London time) on the 10th Business Day following the commencement of the offer
period and, if appropriate, by no later than 3.30 pm (London time) on the 10th
Business Day following the announcement in which any securities exchange
offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead make a
dealing disclosure.

Under Rule 8.3(b) of the City Code, any person who is, or becomes, interested
in 1% or more of any class of relevant securities of the offeree company or of
any securities exchange offeror must make a Dealing disclosure if the person
deals in any relevant securities of the offeree company or of any securities
exchange offeror. A dealing disclosure must contain details of the dealing
concerned and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror(s), save to the extent that these details
have previously been disclosed under Rule 8. A dealing disclosure by a person
to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time)
on the Business Day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will be
deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by
any offeror and dealing disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see Rules
8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and dealing disclosures must be made
can be found in the Disclosure Table on the Takeover Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. You should contact the Panel's Market Surveillance Unit on
+44 (0)20 7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a dealing disclosure.

Publication on website and availability of hard copies

A copy of this Announcement is and will be available, subject to certain
restrictions relating to persons resident in Restricted Jurisdictions, for
inspection on Shell's website www.shell.com and on BG's website
www.bg-group.com by no later than 12 noon (London time) on the Business Day
following this Announcement. For the avoidance of doubt, the contents of the
websites referred to in this Announcement are not incorporated into and do not
form part of this Announcement.

Shell and BG Shareholders may request a hard copy of this Announcement by
contacting Equiniti during business hours on +44 (0)121 415 7073 (for Shell
Shareholders) or +44 (0)121 415 7029 (for BG Shareholders) or by submitting a
request in writing to Equiniti at Aspect House, Spencer Road, Lancing, West
Sussex BN99 6DA.

If you are in any doubt about the contents of this Announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor, accountant
or independent financial adviser duly authorised under the Financial Services
and Markets Act 2000 (as amended) if you are resident in the United Kingdom or,
if not, from another appropriately authorised independent financial adviser.

Not for release, publication or distribution, in whole or in part, in or into
any jurisdiction where to do so would constitute a violation of the relevant
laws of such jurisdiction

THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS OR 
PROSPECTUS EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY INVESTMENT
DECISION IN RELATION TO THE NEW SHELL SHARES EXCEPT ON THE BASIS OF THE
INFORMATION IN THE SCHEME DOCUMENT, THE PROSPECTUS AND THE CIRCULAR WHICH ARE
PROPOSED TO BE PUBLISHED IN DUE COURSE

FOR IMMEDIATE RELEASE

8 April 2015


RECOMMENDED CASH AND SHARE OFFER FOR BG GROUP PLC BY ROYAL DUTCH SHELL PLC

 1. Introduction
   
The Boards of Shell and BG are pleased to announce that they have reached
agreement on the terms of a recommended cash and share offer to be made by
Shell for the entire issued and to be issued share capital of BG.

The Combination is to be implemented by means of a court-sanctioned scheme of
arrangement under Part 26 of the Companies Act 2006.

 2. The Combination
   
Under the terms of the Combination, which will be subject to the Pre-Conditions
set out in Appendix 1, the Conditions and certain further terms set out in
Appendix 2 and to the full terms and conditions which will be set out in the
Scheme Document, BG Shareholders will be entitled to receive:

For each BG Share: 383 pence in cash; and

0.4454 Shell B Shares7

 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.

   
Based on the 90 trading day volume weighted average price of 2,170.3 pence per
Shell B Share on 7 April 2015 (being the last Business Day before the date of
this Announcement), the terms of the Combination represent:

  * a value of approximately 1,350 pence per BG Share; and
   
  * a premium of approximately 52% to the 90 trading day volume weighted
    average price of 890.4 pence per BG Share on 7 April 2015.
   
Based on the Closing Price of 2,208.5 pence per Shell B Share on 7 April 2015
(being the last Business Day before the date of this Announcement), the terms
of the Combination represent:

  * a value of approximately 1,367 pence per BG Share;
   
  * a premium of approximately 50% to the Closing Price of 910.4 pence per BG
    Share on 7 April 2015; and
   
  * a value of approximately £47.0 billion for BG's entire issued and to be
    issued share capital.
   
The Combination will result in BG Shareholders owning approximately 19% of the
Combined Group.

The Boards of Shell and BG have agreed that BG Shareholders will continue to be
entitled to receive their final dividend for 2014 of 14.37 cents (9.52 pence)
per BG Share which has already been announced by BG, as well as an interim
dividend in respect of the six month period up to 30 June 2015 of not more than
the interim dividend in respect of the six month period up to 30 June 2014 of
14.38 cents per BG Share. In addition, should completion of the Combination
occur after the record date for Shell's 2015 fourth quarter interim dividend,
BG Shareholders would be entitled to receive a further BG dividend in respect
of 2015 of not more than the final dividend for 2014 of 14.37 cents per BG
Share. If, however, completion of the Combination occurs prior to the record
date for Shell's 2015 fourth quarter interim dividend, BG Shareholders would
receive that Shell dividend and would not receive a further BG dividend for
2015.

BG Shareholders will benefit from access to Shell's dividend policy in respect
of each dividend for which the record date falls after completion of the
Combination. Shell confirms its intention to pay dividends of $1.88 per
ordinary share in 2015 and at least that amount in 2016.

BG Shareholders will be entitled to elect to receive the share component of the
Consideration in the form of Shell A Shares, as opposed to Shell B Shares, at
the same exchange ratio.

Shell will also provide a Mix and Match Facility, which will allow BG
Shareholders to elect, subject to off-setting elections, to vary the
proportions in which they receive New Shell Shares and cash. The Mix and Match
Facility will not change the total number of New Shell Shares to be issued or
the maximum amount of cash that will be paid under the terms of the
Combination.

The New Shell Shares will be issued credited as fully paid and will rank pari
passu in all respects with Shell ordinary shares in issue at the time the New
Shell Shares are issued pursuant to the Combination, including the right to
receive and retain dividends and other distributions declared, made or paid by
reference to a record date falling after the Effective Date. Application will
be made to the UK Listing Authority and to the London Stock Exchange for the
New Shell Shares to be admitted to the Official List of the UK Listing
Authority and to trading on the main market for listed securities of the London
Stock Exchange, respectively, and to Euronext Amsterdam N.V. for the New Shell
Shares to be admitted to listing and trading on Euronext Amsterdam.

The BG Shares will be acquired pursuant to the Combination fully paid and free
from all liens, charges, equitable interests, encumbrances and rights of
pre-emption and any other interests of any nature whatsoever and together with
all rights attaching thereto.

 3. Recommendations
   The BG Directors, who have been so advised by Goldman Sachs International and
Robey Warshaw LLP, consider the financial terms of the Combination to be fair
and reasonable. In providing advice to the BG Directors, Goldman Sachs
International and Robey Warshaw LLP have taken into account the commercial
assessments of the BG Directors.

Accordingly, the BG Directors intend unanimously to recommend that BG
Shareholders vote in favour of the Scheme at the Court Meeting and the
resolutions relating to the Combination at the BG General Meeting, as they have
irrevocably undertaken to do in respect of their own beneficial holdings of
217,564 BG Shares representing, in aggregate, approximately 0.006% of BG's
issued share capital on 7 April 2015, being the last Business Day before the
date of this Announcement. Further details of these irrevocable undertakings
are set out in Appendix 4 to this Announcement.

The Combination will be put to the vote of Shell Shareholders as a Class 1
transaction for Shell for the purposes of the Listing Rules. The Shell
Directors consider the Combination to be in the best interests of Shell and the
Shell Shareholders as a whole and intend unanimously to recommend that Shell
Shareholders vote in favour of the Shell Resolutions to be proposed at the
Shell General Meeting which will be convened in connection with the
Combination.

The Shell Directors have received financial advice from Bank of America Merrill
Lynch in relation to the Combination. In providing their advice to the Shell
Directors, Bank of America Merrill Lynch has relied upon the Shell Directors'
commercial assessment of the Combination.

 4. Background to and reasons for recommendation
   
BG is an international exploration and production and LNG company. BG has a
strong track record in exploration, having added on average approximately 900
million barrels of oil equivalent of resources to its portfolio every year for
a decade. BG has also built a highly flexible LNG business, with a diverse
portfolio of supply and market positions.

BG's strategy has been to create value for shareholders by leveraging its
capabilities in exploration and from its highly competitive LNG business. BG's
upstream production is currently sourced from base assets in ten countries and
key growth projects in Brazil and Australia. Wide geological technical
expertise combined with commercial agility enables the BG Group to access
exploration opportunities, targeting low-cost early entry positions. BG also
explores at existing hubs, aiming to leverage basin knowledge and existing
infrastructure. In LNG, the BG Group's skills and capabilities span the whole
LNG value chain.

BG made substantial progress on a number of fronts in 2014. The start-up of
QCLNG and the continued introduction of FPSOs in Brazil were notable
operational successes. BG is well placed to manage the downturn in oil prices
as it is reaching the end of a high capital expenditure cycle and will continue
to add further production in 2015 from Brazil and Australia.

The BG Board is confident that BG's stand-alone strategy, under the leadership
of new Chief Executive Helge Lund, will deliver value for BG Shareholders.
However, the BG Board also believes that the Combination accelerates the
delivery of value for BG Shareholders through the headline premium offered.
Furthermore, the share component of the Consideration provides BG Shareholders
with the opportunity for continued exposure to a diversified oil and gas
business, underpinned by the strong industrial logic of the Combination and
Shell's intentions in relation to dividends.

In light of these factors, and having received advice from Goldman Sachs
International and Robey Warshaw LLP, the BG Directors consider the financial
terms of the Combination to be fair and reasonable and intend unanimously to
recommend that BG Shareholders vote in favour of the Scheme at the Court
Meeting and the resolutions relating to the Combination at the BG General
Meeting.

 5. Background to and reasons for the Combination
   
The Shell Board believes the Combination represents a compelling opportunity
for shareholders of both Shell and BG to benefit from the significant value
opportunity arising from the combination of the two highly complementary
portfolios.

A leading LNG player

Shell already has a competitive position in integrated gas, with a broad-based
and growing portfolio. Return on average capital employed, excluding identified
items, from the business was 18% in 2014. Underlying earnings of $10.4 billion
in 2014 represented an increase of 470% since 2009. Integrated gas is one of
Shell's key growth priorities.

The Combination will further develop Shell's competitive position as a major
producer and supplier of LNG, including in the core growth regions of Asia and
the Atlantic basin. Shell and BG will realise immediate benefits from their
complementary LNG production operations.

BG's competitive supply position and focus on trading and shipping will also be
further enhanced by Shell's capabilities, volumes and relationships in these
core areas for the future development of the global gas market.

The Combined Group's equity LNG capacity is expected to be 45 mtpa in 2018,
compared to Shell's 26 mtpa in 2014.

Deepening of competitive position in deep water Brazil

Shell is well established as a leader in deep water with approximately 10% of
its total production already coming from deep water fields. Shell's technology
and capabilities in this area are recognised as among the best in the industry,
and return on average capital employed for deep water, excluding identified
items, is attractive at 12% in 2014.

In 2013, Shell entered the Libra pre-salt discovery in Brazil. This experience
with Libra, coupled with its 100 years of history in Brazil, provides Shell
with a high level of confidence in the profitability and growth potential that
can be unlocked by combining Shell's capabilities, portfolio and relationships
with BG's competitive deep water position there.

The Combination will enhance Shell's position as a major reserves holder and
investor in Brazil, with the potential to increase Shell production from 52,000
boepd in 2014 to an estimated 550,000 boepd for the Combined Group at the end
of the decade.

BG's deep water Brazil acreage offers near-term growth and options in the
Santos Basin, complementing Shell's existing production, and longer term growth
potential from the Libra project.

The Combined Group will be the principal partner alongside Petrobras, working
to ensure best practice and learnings are applied for the Combined Group's deep
water development in Brazil in the coming decades.

Springboard for further portfolio change in Shell

Shell is implementing a strategy to improve financial performance, enhance
capital efficiency and ensure strong project delivery.

The Combination will add some 25% to Shell's proved oil and gas reserves,
increasing them to approximately 17 billion boe8, and 20% to oil and gas
production, increasing it to 3.7 million boepd, in each case on a 2014 basis,
with strong growth potential.

The Combination will result in an enhanced suite of growth projects and options
for development, enabling acceleration of this strategy, creating a more
competitive cost structure which would be better suited to a potentially
sustained period of oil price volatility, and allowing a higher rate of
portfolio restructuring and asset sales.

Capital investment and exploration spending for the Combined Group will be
restructured and Shell expects a reduction to the organic capital investment
programme to below $40 billion in 2016 and lower again in 2017. As part of this
restructuring, combined conventional exploration spending will be reduced.

 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.

   
The Combined Group is expected to make substantial disposals of non-core
operations following completion of the Combination. Subject to achieving what
the Shell Board considers to be reasonable value for such operations, Shell
expects these disposals to reach $30 billion during 2016 to 2018.

Cash flow, buyback potentialand dividend intentions

Shell's net cash flow from operations in 2014 was approximately $45 billion,
comprising approximately $20 billion from deep water and integrated gas, with
the remainder from upstream and downstream engines and longer term positions,
all at $99/bbl Brent oil prices.

By applying its capabilities to the BG assets, Shell believes that by around
2020 the Combination would drive a substantial improvement in Shell's cash flow
from operations and free cash flow, enhancing Shell's dividend and share
buyback potential. On this basis, Shell believes that by around 2020 the
Combined Group will have9:

  * two strategic growth businesses - deep water and integrated gas - that
    could potentially each generate $15-$20 billion of cash flow from
    operations per annum;
   
  * upstream and downstream engines that could potentially generate a further
    combined $15-$20 billion of cash flow from operations per annum in total;
    and
   
  * long-term positions which could potentially add around a further $10
    billion of cash flow from operations per annum.
   
The final outcome will be influenced by factors such as operating and
development performance, oil prices, asset sales, and the pace of new
investment decisions.

Following completion of the Combination, Shell's priorities for cash will be
(1) reducing debt; (2) dividends; and (3) share buy backs and capital
investment, and Shell plans to pay down debt from 2016 in order to maintain a
strong balance sheet and credit rating to underpin its business model.

Subject to progress with debt reduction and Brent oil prices recovering towards
the middle of Shell's long term planning range, Shell expects to commence a
share buyback programme in 2017 of at least $25 billion for the period 2017 to
2020, with the number of shares to be repurchased under this programme intended
to offset the shares issued under the Shell scrip dividend programme, and to
significantly reduce the equity issued in connection with the Combination. The
Shell scrip dividend programme is expected to be withdrawn in 2017. Shell
expects that buybacks of both Shell A and Shell B Shares will be possible from
2017, without significant dividend withholding tax implications for Shell.
Shell intends to buy back the cheaper of the two shares from a Shell
perspective.

 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.

   
Shell confirms its intention to pay dividends of $1.88 per ordinary share in
2015 and at least that amount in 2016.

 6. Synergy potential of the Combination
   
Shell and BG have a good portfolio and country fit which offer synergy
potential in a number of areas.

Shell is confident that, as a direct result of the Combination, the Combined
Group could generate attractive synergies and create additional shareholder
value. Shell has identified pre-tax synergies that are expected to reach $2.5
billion per annum in 2018, comprising $1 billion of operating cost savings and
a $1.5 billion reduction in exploration expenditure. As reported below, Shell
is also confident of realising additional synergies that cannot be quantified
for reporting under the City Code at this time.

The potential sources of quantified cost savings, which are in addition to
savings previously targeted by Shell and BG separately, include savings from:

  * corporate, administrative, organisational and IT operational efficiencies;
   
  * efficiencies in marketing and shipping costs;
   
  * efficiencies in operated procurement spend; and
   
  * the reduction in exploration expenditure enabled by high-grading and
    optimisation of the combined exploration portfolio.
   
These savings would be incremental to any savings already planned by Shell.

The cost savings referred to in the first two bullets above are expected to be
recurring.

Shell estimates that the implementation of the operating cost savings would
give rise to one-off 

- More to follow, for following part double click  ID:nPRr8DD4Bb