REG-Royal Dutch Shell: Recommended Cash & Share Offer for BG Group by Shell PLC <Origin Href="QuoteRef">RDSa.L</Origin> - Part 3
08/04/2015 07:22
- Part 3: For the preceding part double click ID:nPRr8DD4Bb
PRE-CONDITIONS TO THE COMBINATION
The posting of the Scheme Document or making of an Offer will take place
following the satisfaction or waiver of the Pre-Conditions below. Shell shall
be entitled to waive each of the following Pre-Conditions in whole or in part:
European Commission clearance
a. insofar as the Combination constitutes, or is deemed to constitute, a
concentration with an EU dimension within the scope of the Regulation:
i. the European Commission having issued a decision, on terms reasonably
satisfactory to Shell, allowing the Combination to proceed under
Article 6(1)(b), Article 6(2), Article 8(1) or Article 8(2) of the
Regulation (or being deemed to have done so under Article 10(6) of the
Regulation); and/or
ii. if any aspect of the Combination is referred to one or more competent
authorities of an European Union or EFTA state under Article 9 of the
Regulation, confirmation having been received from each such competent
authority that the Combination may proceed on terms reasonably
satisfactory to Shell; and
iii. no indication having been made that a European Union or EFTA state may
take appropriate measures to protect legitimate interests pursuant to
Article 21(4) of the Regulation in relation to the Combination or any
aspect of it;
Brazilian CADE clearance
b. insofar as the Combination triggers a mandatory filing requirement, CADE
having approved the consummation of the Combination on terms reasonably
satisfactory to Shell, pursuant to the Brazilian competition law No 12529
of 30 November 2011, Title VII Chapter I;
Chinese MOFCOM clearance
c. insofar as the Combination triggers a mandatory merger control filing
requirement, a filing having been made to and accepted by MOFCOM pursuant
to the Anti-Monopoly Law and MOFCOM having issued a decision confirming
that it will not conduct further review of the Combination or allowing the
Combination to proceed on terms reasonably satisfactory to Shell or all
applicable waiting periods under the Anti-Monopoly Law in respect of the
review of the Combination having expired;
Australian foreign investment clearance
d. one of the following having occurred:
i. Shell having received written notice issued by or on behalf of the
Australian Treasurer stating that there are no objections under the
Australian Government's foreign investment policy to the Combination,
such notice being on terms reasonably satisfactory to Shell; or
ii. the period provided under FATA during which the Australian Treasurer
may make an order or interim order under FATA prohibiting the
Combination having expired, without such an order having been made; or
iii. if an interim order shall have been made to prohibit the Combination,
the subsequent period for making a final order having elapsed without
any such final order having been made; and
Australian antitrust clearance
e. either one of the following having occurred:
i. Shell having received notice in writing from the ACCC to the effect
that the ACCC does not propose to intervene in or seek to prevent the
Combination pursuant to section 50 of the Australian Competition and
Consumer Act 2010, such notice being on terms reasonably satisfactory
to Shell; or
ii. Shell having been granted clearance or authorisation for the
Combination by the ACCC or the Australian Competition Tribunal under
Part VII, Division 3 of the Australian Competition and Consumer Act
2010 (such clearance or authorisation being on terms reasonably
satisfactory to Shell), and no application for review of such clearance
or authorisation having been made within the period prescribed by such
Act.
APPENDIX 2
CONDITIONS TO AND CERTAIN FURTHER TERMS OF THE COMBINATION
Part A: Conditions to the Combination
The Combination will be conditional upon the Scheme becoming unconditional and
becoming effective by no later than the Long Stop Date, or such later date (if
any) as Shell and BG may agree and the Court may allow.
Scheme approval
(a) The Scheme will be conditional upon:
i. its approval by a majority in number representing not less than
three-fourths in value of the Scheme Shareholders (or the relevant class or
classes thereof, if applicable) present and voting, either in person or by
proxy, at the Court Meeting and at any separate class meeting which may be
required by the Court or at any adjournment of any such meeting on or
before the 22nd day after the expected date of the Court Meeting to be set
out in the Scheme Document in due course (or such later date, if any, as
Shell and BG may agree and the Court may allow);
ii. all resolutions necessary to approve and implement the Scheme being duly
passed by the requisite majority or majorities at the BG General Meeting or
at any adjournment of that meeting on or before the 22nd day after the
expected date of the General Meeting to be set out in the Scheme Document
in due course (or such later date, if any, as Shell and BG may agree and
the Court may allow); and
iii. the sanction of the Scheme by the Court with or without modification (but
subject to any such modification being acceptable to Shell and BG) on or
before the 22nd day after the expected date of the Scheme Court Hearing to
be set out in the Scheme Document in due course (or such later date, if
any, as Shell and BG may agree and the Court may allow) and the delivery of
a copy of the Scheme Court Order to the Registrar of Companies in England
and Wales.
In addition, Shell and BG have agreed that the Combination will be conditional
upon the following Conditions and, accordingly, the necessary actions to make
the Scheme effective will not be taken unless the following Conditions (as
amended if appropriate) have been satisfied or, where relevant, waived:
European Commission clearance
(b) if the Pre-Condition set out in paragraph (a) (European Commission
clearance) of Appendix 1 is waived, insofar as the Combination constitutes, or
is deemed to constitute, a concentration with an EU dimension within the scope
of the Regulation:
i. the European Commission having issued a decision, on terms reasonably
satisfactory to Shell, allowing the Combination to proceed under Article 6
(1)(b), Article 6(2), Article 8(1) or Article 8(2) of the Regulation in
respect of the Combination (or being deemed to have done so under Article
10(6) of the Regulation); and/or
ii. if any aspect of the Combination is referred to one or more competent
authorities of a European Union or EFTA state under Article 9 of the
Regulation, confirmation having been received from each such competent
authority that the Combination may proceed on terms reasonably satisfactory
to Shell; and
iii. no indication having been made that a European Union or EFTA state may
take appropriate measures to protect legitimate interests pursuant to
Article 21(4) of the Regulation in relation to the Combination or any
aspect of it;
Brazilian CADE clearance
(c) if the Pre-Condition set out in paragraph (b) (Brazilian CADE clearance) of
Appendix 1 is waived, insofar as the Combination triggers a mandatory filing
requirement, CADE having approved the consummation of the Combination on terms
reasonably satisfactory to Shell, pursuant to the Brazilian competition law No
12529 of 30 November 2011, Title VII Chapter I;
Chinese MOFCOM clearance
(d) if the Pre-Condition set out in paragraph (c) (Chinese MOFCOM clearance) of
Appendix 1 is waived, insofar as the Combination triggers a mandatory merger
control filing requirement, a filing having been made to and accepted by MOFCOM
pursuant to the Anti-Monopoly Law and MOFCOM having issued a decision
confirming that it will not conduct further review of the Combination or
allowing the Combination to proceed on terms reasonably satisfactory to Shell
or all applicable waiting periods under the Anti-Monopoly Law in respect of the
review of the Combination having expired;
Australian foreign investment clearance
(e) if the Pre-Condition set out in paragraph (d) (Australian foreign
investment clearance) of Appendix 1 is waived, one of the following having
occurred:
i. Shell having received written notice issued by or on behalf of the
Australian Treasurer stating that there are no objections under the
Australian Government's foreign investment policy to the Combination, such
notice being on terms reasonably satisfactory to Shell; or
ii. the period provided under FATA during which the Australian Treasurer may
make an order or interim order under FATA prohibiting the Combination
having expired, without such an order having been made; or
iii. if an interim order shall have been made to prohibit the Combination, the
subsequent period for making a final order having elapsed without any such
final order having been made;
Australian antitrust clearance
(f) if the Pre-Condition set out in paragraph (e) (Australian antitrust
clearance) of Appendix 1 is waived, either one of the following having
occurred:
i. Shell having received notice in writing from the ACCC to the effect that
the ACCC does not propose to intervene in or seek to prevent the
Combination pursuant to section 50 of the Australian Competition and
Consumer Act 2010, such notice being on terms reasonably satisfactory to
Shell; or
ii. Shell having been granted clearance or authorisation for the Combination by
the ACCC or the Australian Competition Tribunal under Part VII, Division 3
of the Australian Competition and Consumer Act 2010 (such clearance or
authorisation being on terms reasonably satisfactory to Shell), and no
application for review of such clearance or authorisation having been made
within the period prescribed by such Act.
United States Hart-Scott-Rodino clearance
(g) all filings having been made and all or any appropriate waiting periods
under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976
and the regulations thereunder having expired, lapsed or been terminated as
appropriate in each case in respect of the Combination and the proposed
acquisition of any BG Shares or control of BG by Shell or any member of the
Shell Group;
United Kingdom Secretary of State confirmation
(h) the United Kingdom Secretary of State for Energy and Climate Change
confirming in writing that it does not intend (i) to revoke or recommend the
revocation of any interest in any material exploration or production licence in
the United Kingdom held by any member of the BG Group; or (ii) to require a
further change of control of any such member, in each case as result of the
implementation of the Combination;
General Third Party clearances
(i) the waiver (or non-exercise within any applicable time limits) by any
relevant government or governmental, quasi-governmental, supranational,
statutory, regulatory, environmental or investigative body, court, trade
agency, association, institution, any entity owned or controlled by any
relevant government or state, or any other body or person whatsoever in any
jurisdiction (each a "Third Party") of any termination right, right of
pre-emption, first refusal or similar right (which is material in the context
of the Wider BG Group taken as a whole) arising as a result of or in connection
with the Combination including, without limitation, its implementation and
financing or the proposed direct or indirect acquisition of any shares or other
securities in, or control of, BG by Shell or any member of the Shell Group;
(j) other than in respect of Conditions (a) to (h) above, all necessary filings
or applications having been made in connection with the Combination and all
statutory or regulatory obligations in any jurisdiction having been complied
with in connection with the Combination or the acquisition by any member of the
Wider Shell Group of any shares or other securities in, or control of, BG and
all authorisations, orders, recognitions, grants, consents, licences,
confirmations, clearances, permissions and approvals reasonably deemed
necessary or appropriate by Shell or any member of the Wider Shell Group for or
in respect of the Combination including without limitation, its implementation
and financing or the proposed direct or indirect acquisition of any shares or
other securities in, or control of, BG or any member of the Wider BG Group by
any member of the Wider Shell Group having been obtained in terms and in a form
reasonably satisfactory to Shell from all appropriate Third Parties or persons
with whom any member of the Wider BG Group has entered into contractual
arrangements and all such authorisations, orders, recognitions, grants,
consents, licences, confirmations, clearances, permissions and approvals
together with all material authorisations orders, recognitions, grants,
licences, confirmations, clearances, permissions and approvals necessary or
appropriate to carry on the business of any member of the Wider BG Group which
is material in the context of the Shell Group or the BG Group as a whole or of
the financing of the Combination remaining in full force and effect and all
filings necessary for such purpose having been made and there being no notice
or intimation of any intention to revoke or not to renew any of the same at the
time at which the Combination becomes otherwise unconditional and all necessary
statutory or regulatory obligations in any jurisdiction having been complied
with;
(k) other than in respect of Conditions (a) to (h) above, no Third Party having
decided to take, institute, implement or threaten any action, proceeding, suit,
investigation, enquiry or reference, or enacted, made or proposed any statute,
regulation, decision or order, or having taken any other steps which would or
might reasonably be expected to:
i. require, prevent or delay the divestiture, or materially alter the terms
envisaged for any proposed divestiture by any member of the Wider Shell
Group or any member of the Wider BG Group of all or any portion of their
respective businesses, assets or property or impose any limitation on the
ability of any of them to conduct their respective businesses (or any of
them) or to own any of their respective assets or properties or any part
thereof which, in any such case, is material in the context of the Wider
Shell Group or the Wider BG Group in either case taken as a whole;
ii. require, prevent or delay the divestiture by any member of the Wider Shell
Group of any shares or other securities in BG;
iii. impose any material limitation on, or result in a delay in, the ability of
any member of the Wider Shell Group directly or indirectly to acquire or to
hold or to exercise effectively any rights of ownership in respect of
shares or loans or securities convertible into shares or any other
securities (or the equivalent) in any member of the Wider BG Group or the
Wider Shell Group or to exercise management control over any such member;
iv. otherwise adversely affect the business, assets, profits or prospects of
any member of the Wider Shell Group or of any member of the Wider BG Group
to an extent which is material in the context of the Shell Group or the BG
Group in either case taken as a whole;
v. make the Combination or its implementation or the acquisition or proposed
acquisition by Shell or any member of the Wider Shell Group of any shares
or other securities in, or control of BG void, illegal, and/or
unenforceable under the laws of any jurisdiction, or otherwise, directly or
indirectly, restrain, restrict, prohibit, delay or otherwise materially
interfere with the same, or impose additional conditions or obligations
with respect thereto, or otherwise challenge or interfere therewith;
vi. require any member of the Wider Shell Group or the Wider BG Group to offer
to acquire any shares or other securities (or the equivalent) or interest
in any member of the Wider BG Group or the Wider Shell Group owned by any
third party;
vii. impose any limitation on the ability of any member of the Wider BG Group to
co-ordinate its business, or any part of it, with the businesses of any
other members which is adverse to and material in the context of the Wider
BG Group taken as a whole or in the context of the Combination; or
viii. result in any member of the Wider BG Group ceasing to be able to carry on
business under any name under which it presently does so,
and all applicable waiting and other time periods during which any such Third
Party could institute, implement or threaten any action, proceeding, suit,
investigation, enquiry or reference or any other step under the laws of any
jurisdiction in respect of the Combination or the acquisition or proposed
acquisition of any BG Shares having expired, lapsed or been terminated;
Shell Shareholder approval
(l) the passing at the Shell General Meeting (or any adjournment thereof) of
such resolution or resolutions as are necessary to approve, implement and
effect the Combination including to authorise the creation and allotment of New
Shell Shares pursuant to the Combination (as such resolutions may be set out in
the Circular in due course);
Listing of New Shell Shares
(m) (i) the UK Listing Authority having acknowledged to Shell or its agent (and
such acknowledgement not having been withdrawn) that the application for the
admission of the New Shell Shares to the Official List with a premium listing
has been approved and (after satisfaction of any conditions to which such
approval is expressed to be subject ("listing conditions")) will become
effective as soon as a dealing notice has been issued by the FCA and any
listing conditions having been satisfied, and (ii) the London Stock Exchange
having acknowledged to Shell or its agent (and such acknowledgement not having
been withdrawn) that the New Shell Shares will be admitted to trading on the
Main Market;
(n) Shell or its agent having received confirmation (and such confirmation not
having been withdrawn) that the application for listing and trading of the New
Shell Shares on Euronext Amsterdam has been approved, with such listing and
trading to become effective on the Effective Date;
(o) absent an available exemption from the registration requirements of the US
Securities Act, an appropriate registration statement for the New Shell Shares
to be issued pursuant to the Combination having been declared effective under
the US Securities Act, and no stop order suspending the effectiveness of the
registration statement having been issued nor proceedings for that purpose
having been initiated or threatened by the SEC;
Certain matters arising as a result of any arrangement, agreement etc.
(p) save as Disclosed, there being no provision of any agreement, arrangement,
licence, permit or other instrument to which any member of the Wider BG Group
is a party or by or to which any such member or any of its assets may be bound,
entitled or subject, which in consequence of the Combination or the proposed
acquisition of any shares or other securities in BG or because of a change in
the control or management of BG or otherwise, could or might reasonably be
expected to result in to an extent which is material in the context of the
Wider BG Group, or the Wider Shell Group, in either case taken as a whole, or
in the context of the Combination:
i. any moneys borrowed by or any other indebtedness (actual or contingent) of,
or grant available to any such member, being or becoming repayable or
capable of being declared repayable immediately or earlier than their or
its stated maturity date or repayment date or the ability of any such
member to borrow moneys or incur any indebtedness being withdrawn or
inhibited or being capable of becoming or being withdrawn or inhibited;
ii. any such agreement, arrangement, licence, permit or instrument or the
rights, liabilities, obligations or interests of any such member thereunder
being terminated or modified or affected or any obligation or liability
arising or any action being taken or arising thereunder;
iii. any assets or interests of any such member being or falling to be disposed
of or charged or any right arising under which any such asset or interest
could be required to be disposed of or charged;
iv. the creation or enforcement of any mortgage, charge or other security
interest over the whole or any part of the business, property or assets of
any such member;
v. the rights, liabilities, obligations or interests of any such member in,
or the business of any such member with, any person, firm or body (or any
arrangement or arrangements relating to any such interest or business)
being terminated, adversely modified or affected;
vi. the value of any such member or its financial or trading position or
prospects being prejudiced or adversely affected;
vii. any such member ceasing to be able to carry on business under any name
under which it presently does so; or
viii. the creation of any liability, actual or contingent, by any such member,
and no event having occurred which, under any provision of any agreement,
arrangement, licence, permit or other instrument to which any member of the
Wider BG Group is a party or by or to which any such member or any of its
assets may be bound, entitled or subject, would or might reasonably be expected
to result in any of the events or circumstances as are referred to in
sub-paragraphs (i) to (viii) of this condition;
Certain events occurring since 31 December 2014
(q) save as Disclosed, no member of the Wider BG Group having, since 31
December 2014:
i. save as between BG and wholly-owned subsidiaries of BG or for BG Shares
issued under or pursuant to the exercise of options and vesting of awards
granted under the BG Share Plans, issued, authorised or proposed the issue
of additional shares of any class;
ii. save as between BG and wholly-owned subsidiaries of BG or for the grant of
options and awards and other rights under the BG Share Plans, issued or
agreed to issue, authorised or proposed the issue of securities convertible
into shares of any class or rights, warrants or options to subscribe for,
or acquire, any such shares or convertible securities;
iii. other than to another member of the BG Group, recommended, declared, paid
or made any dividend or other distribution whether payable in cash or
otherwise except for: (i) the final dividend of 14.37 cents (9.52 pence)
per BG Share announced on 3 February 2015; (ii) an interim dividend in
respect of the six month period up to 30 June 2015 of not more than 14.38
cents per BG Share; and (iii) if completion of the Combination occurs after
the record date for Shell's 2015 fourth quarter interim dividend, a further
BG dividend in respect of 2015 of not more than 14.37 cents per BG Share;
iv. save for intra-BG Group transactions, merged or demerged with any body
corporate or acquired or disposed of or transferred, mortgaged or charged
or created any security interest over any assets or any right, title or
interest in any asset (including shares and trade investments) or
authorised or proposed or announced any intention to propose any merger,
demerger, acquisition or disposal, transfer, mortgage, charge or security
interest, in each case, other than in the ordinary course of business and,
in each case, to the extent which is material in the context of the Wider
BG Group taken as a whole;
v. save for intra-BG Group transactions, made or authorised or proposed or
announced an intention to propose any change in its loan capital in each
case, to the extent which is material in the context of the Wider BG Group
taken as a whole;
vi. issued, authorised or proposed the issue of any debentures or (save for
intra-BG Group transactions), save in the ordinary course of business,
incurred or increased any indebtedness or become subject to any contingent
liability;
vii. purchased, redeemed or repaid or announced any proposal to purchase,
redeem or repay any of its own shares or other securities or reduced or,
save in respect to the matters mentioned in sub-paragraph (i) above, made
any other change to any part of its share capital in each case, to the
extent which is material in the context of the Wider BG Group taken as a
whole;
viii. implemented, or authorised, proposed or announced its intention to
implement, any reconstruction, amalgamation, scheme, commitment or other
transaction or arrangement otherwise than in the ordinary course of
business or entered into or changed the terms of any contract with any
director or senior executive;
ix. entered into or varied or authorised, proposed or announced its
intention to enter into or vary any contract, transaction or commitment
(whether in respect of capital expenditure or otherwise) which is of a long
term, onerous or unusual nature or magnitude or which is or could be
materially restrictive on the businesses of any member of the Wider BG
Group or the Wider Shell Group or which involves or is reasonably likely to
involve an obligation of such a nature or magnitude or which is other than
in the ordinary course of business, in each case, to the extent which is
material in the context of the Wider BG Group taken as a whole;
x. (other than in respect of a member which is dormant and was solvent at
the relevant time) taken any corporate action or had any legal proceedings
started or threatened against it for its winding-up, dissolution or
reorganisation or for the appointment of a receiver, administrative
receiver, administrator, trustee or similar officer of all or any part of
its assets or revenues or any analogous proceedings in any jurisdiction or
had any such person appointed, in each case, to the extent which is
material in the context of the Wider BG Group taken as a whole;
xi. entered into any contract, transaction or arrangement which would be
restrictive on the business of any member of the Wider BG Group or the
Wider Shell Group other than to a nature and extent which is normal in the
context of the business concerned;
xii. waived or compromised any claim otherwise than in the ordinary course of
business which is material in the context of the BG Group taken as a whole;
xiii. entered into any contract, commitment, arrangement or agreement otherwise
than in the ordinary course of business or passed any resolution or made
any Combination (which remains open for acceptance) with respect to or
announced any intention to, or to propose to, effect any of the
transactions, matters or events referred to in this condition;
xiv. having made or agreed or consented to any change to:
1. the terms of the trust deeds constituting the pension scheme(s)
established by any member of the Wider BG Group for its directors,
employees or their dependents;
2. the contributions payable to any such scheme(s) or to the benefits
which accrue or to the pensions which are payable thereunder;
3. the basis on which qualification for, or accrual or entitlement to,
such benefits or pensions are calculated or determined; or
4. the basis upon which the liabilities (including pensions) of such
pension schemes are funded, valued or made,
in each case, to the extent which is material in the context of the Wider BG
Group taken as a whole;
xv. proposed, agreed to provide or modified the terms of any of the BG
Share Plans or other benefit constituting a material change relating to the
employment or termination of employment of a material category of persons
employed by the Wider BG Group or which constitutes a material change to
the terms or conditions of employment of any senior employee of the Wider
BG Group, save as agreed by the Panel or by Shell; or
xvi. taken (or agreed or proposed to take) any action which requires, or
would require, the consent of the Panel or the approval of BG Shareholders
in general meeting in accordance with, or as contemplated by, Rule 21.1 of
the City Code,
and, for the purposes of paragraphs (iii), (iv), (v) and (vi) of this
condition, the term "BG Group" shall mean BG and its wholly-owned subsidiaries;
No adverse change, litigation or regulatory enquiry
(r) save as Disclosed, since 31 December 2014:
i. no adverse change or deterioration having occurred in the business, assets,
financial or trading position or profits or prospects of any member of the
Wider BG Group which is material in the context of the Wider BG Group taken
as a whole;
ii. no litigation, arbitration proceedings, prosecution or other legal
proceedings to which any member of the Wider BG Group is or may become a
party (whether as a plaintiff, defendant or otherwise) and no investigation
by any Third Party against or in respect of any member of the Wider BG
Group having been instituted announced or threatened by or against or
remaining outstanding in respect of any member of the Wider BG Group which
in any such case has had or might reasonably be expected to have an adverse
effect on the Wider BG Group taken as a whole;
iii. no contingent or other liability having arisen or become apparent to Shell
which would be likely to adversely affect the Wider BG Group taken as a
whole; and
iv. no steps having been taken which are likely to result in the withdrawal,
cancellation, termination or modification of any licence held by any member
of the Wider BG Group which is necessary for the proper carrying on of its
business and the withdrawal, cancellation, termination or modification of
which has had, or would reasonably be expected to have, a material adverse
effect on the Wider BG Group taken as a whole;
No discovery of certain matters
(s) save as Disclosed, Shell not having discovered:
i. that any financial, business or other information concerning the Wider BG
Group as contained in the information publicly disclosed at any time by or
on behalf of any member of the Wider BG Group is materially misleading,
contains a material misrepresentation of fact or omits to state a fact
necessary to make that information not misleading, in each case, to the
extent which is material in the context of the Wider BG Group taken as a
whole;
ii. that any member of the Wider BG Group, partnership, company or other
entity in which any member of the Wider BG Group has a significant economic
interest and which is not a subsidiary undertaking of BG is subject to any
liability (contingent or otherwise) which is not disclosed in the Annual
Report and Accounts of BG for the year ended 31 December 2014 in each case,
to the extent which is material in the context of the Wider BG Group taken
as a whole; or
iii. any information which affects the import of any information disclosed at
any time by or on behalf of any member of the Wider BG Group and which is
material in the context of the Wider BG Group taken as a whole;
(t) save as Disclosed, Shell not having discovered that:
i. any past or present member of the Wider BG Group has failed to comply with
any and/or all applicable legislation or regulation, of any jurisdiction
with regard to the storage, carriage, disposal, spillage, release,
discharge, leak or emission of any waste or hazardous substance or any
substance likely to impair the environment or harm human health or animal
health or otherwise relating to environmental matters or the health and
safety of humans, or that there has otherwise been any such storage,
carriage, disposal, spillage, release, discharge, leak or emission (whether
or not the same constituted a non-compliance by any person with any such
legislation or regulations, and wherever the same may have taken place) any
of which storage, carriage, disposal, spillage, release, discharge, leak or
emission would be likely to give rise to any liability (actual or
contingent) on the part of any member of the Wider BG Group and which is
material in the context of the Wider BG Group taken as a whole;
ii. there is, or is likely to be, for that or any other reason whatsoever, any
liability (actual or contingent) of any past or present member of the Wider
BG Group to make good, repair, reinstate or clean up any property or any
controlled waters now or previously owned, occupied, operated or made use
of or controlled by any such past or present member of the Wider BG Group,
under any environmental legislation, regulation, notice, circular or order
of any government, governmental, quasi-governmental, state or local
government, supranational, statutory or other regulatory body, agency,
court, association or any other person or body in any jurisdiction and
which is material in the context of the Wider BG Group taken as a whole or
the Combination;
iii. circumstances exist (whether as a result of the Combination or otherwise)
which would be reasonably likely to lead to any Third Party instituting, or
whereby any member of the Wider Shell Group or any present or past member
of the Wider BG Group would be likely to be required to institute, an
environmental audit or take any other steps which would in any such case be
reasonably likely to result in any liability (whether actual or contingent)
to improve, modify existing or install new plant, machinery or equipment or
carry out changes in the processes currently carried out or make good,
remediate, repair, re-instate or clean up any land or other asset currently
or previously owned, occupied or made use of by any past or present member
of the Wider BG Group (or on its behalf) or by any person for which a
member of the Wider BG Group is or has been responsible, or in which any
such member may have or previously have had or be deemed to have had an
interest which is material in the context of the Wider BG Group taken as a
whole or the Combination; or
iv. circumstances exist whereby a person or class of persons would be
likely to have any claim or claims in respect of any product or process of
manufacture or materials used therein currently or previously manufactured,
sold or carried out by any past or present member of the Wider BG Group
which claim or claims would be likely, materially and adversely, to affect
any member of the Wider BG Group and which is material in the context of
the BG Group taken as a whole or the Combination; and
Anti-corruption, sanctions and criminal property
(u) save as Disclosed, Shell not having discovered that:
i. (a) any past or present member, director, officer or employee of the Wider
BG Group is or has at any time engaged in any activity, practice or conduct
which would constitute an offence under the Bribery Act 2010, the US
Foreign Corrupt Practices Act of 1977 or any other applicable
anti-corruption legislation or (b) any person that performs or has
performed services for or on behalf of the Wider BG Group is or has at any
time engaged in any activity, practice or conduct in connection with the
performance of such services which would constitute an offence under the
Bribery Act 2010, the US Foreign Corrupt Practices Act of 1977 or any other
applicable anti-corruption legislation; or
ii. any asset of any member of the Wider BG Group constitutes criminal property
as defined by section 340(3) of the Proceeds of Crime Act 2002 (but
disregarding paragraph (b) of that definition); or
iii. any past or present member, director, officer or employee of the BG Group,
or any other person for whom any such person may be liable or responsible,
has engaged in any business with, made any investments in, made any funds
or assets available to or received any funds or assets from: (a) any
government, entity or individual in respect of which US or European Union
persons, or persons operating in those territories, are prohibited from
engaging in activities or doing business, or from receiving or making
available funds or economic resources, by US or European Union laws or
regulations, including the economic sanctions administered by the United
States Office of Foreign Assets Control, or HM Treasury & Customs; or (b)
any government, entity or individual targeted by any of the economic
sanctions of the United Nations, the United States, the European Union or
any of its member states; or
iv. no member of the BG Group being engaged in any transaction which would
cause Shell to be in breach of any law or regulation upon its acquisition
of BG, including the economic sanctions of the United States Office of
Foreign Assets Control, or HM Treasury & Customers, or any government,
entity or individual targeted by any of the economic sanctions of the
United Nations, the United States, the European Union or any of its member
states.
For the purposes of these Conditions the "Wider BG Group" means BG and its
subsidiary undertakings, associated undertakings and any other undertaking in
which BG and/or such undertakings (aggregating their interests) have a
significant interest and the "Wider Shell Group" means Shell and its subsidiary
undertakings, associated undertakings and any other undertaking in which Shell
and/or such undertakings (aggregating their interests) have a significant
interest and for these purposes "subsidiary undertaking" and "undertaking" have
the meanings given by the Companies Act 2006, "associated undertaking" has the
meaning given by paragraph 19 of Schedule 6 to the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008 other than
paragraph 19(1)(b) of Schedule 6 to those Regulations which shall be excluded
for this purpose, and "significant interest" means a direct or indirect
interest in 20% or more of the equity share capital (as defined in the
Companies Act 2006).
Part B: Waiver and Invocation of the Pre-Conditions and Conditions
Shell reserves the right to waive, in whole or in part, all or any of the
Pre-Conditions in Appendix 1 of this Announcement or the Conditions in Part A
above, except for Conditions (a) (Scheme approval), (l) (Shell Shareholder
approval), (m) (UK listing), (n) (Euronext Amsterdam listing) and (o) (SEC
registration), which cannot be waived.
Conditions (l) (Shell Shareholder approval), (m) (UK listing), (n) (Euronext
Amsterdam listing) and (o) (SEC registration), must be fulfilled by, and the
Pre-Conditions and Conditions (b) to (k) (inclusive) and (p) to (u) (inclusive)
fulfilled or waived by, no later than 11.59pm on the date immediately preceding
the date of the Scheme Court Hearing, failing which the Scheme will lapse.
Shell shall be under no obligation to waive or treat as satisfied any of the
Pre-Conditions or Conditions which are capable of waiver by a date earlier than
the latest date specified above for the fulfilment or waiver thereof,
notwithstanding that the other Pre-Conditions or Conditions to the Combination
may at such earlier date have been waived or fulfilled and that there are at
such earlier date no circumstances indicating that any of such Pre-Conditions
or Conditions may not be capable of fulfilment.
If Shell is required by the Panel to make an offer for BG Shares under the
provisions of Rule 9 of the City Code, Shell may make such alterations to any
of the above Conditions as are necessary to comply with the provisions of that
Rule.
If the Pre-Condition set out in paragraph (a) (European Commission clearance)
of Appendix 1 is waived, the Scheme or Offer (as applicable) will lapse if: (i)
after the point at which the Pre-Condition is waived, the European Commission
either initiates Phase 2 proceedings in respect of the Combination before the
Court Meeting and the BG General Meeting; or (ii) it makes a referral to a
competent authority of the United Kingdom under Article 9(1) of the Regulation
and, after the point at which the Pre-Condition is waived, the CMA then
initiates a Phase 2 reference in respect of the Combination.
Part C: Implementation by way of Offer
Shell reserves the right (with the consent of the Panel) to implement the
Combination by way of an Offer: (i) with the consent of the BG Board; (ii) if a
third party announces a firm intention to make an offer for BG which is
recommended by the BG Board; or (iii) if the BG Board otherwise withdraws its
recommendation of the Combination. If the Combination is implemented by way of
an Offer, the consent of the Dutch Revenue Service to the issue of Shell B
Shares described in paragraph 13 would cease to be in force and the share
component of the Consideration would comprise Shell A Shares only. BG
Shareholders would in such circumstances (if Shell is permitted to exercise its
right to implement the Combination by way of an Offer) be entitled to receive
383 pence in cash and 0.4454 Shell A shares per BG share. In such event, such
Offer will be implemented on the same terms, so far as applicable, as those
which would apply to the Scheme, subject to appropriate amendments to reflect
the change in method of effecting the Combination, including: (a) the offer of
Shell A Shares alone in respect of the share component of the Consideration (as
described in paragraph 13 of this Announcement); and (b) (without limitation
and subject to the consent of the Panel) an acceptance condition that is set at
90% (or such lesser percentage, as Shell may, in accordance with the provisions
of the Co-operation Agreement, decide) (i) in nominal value of the shares to
which such Offer relates; and (ii) of the voting rights attached to those
shares, and that is subject to Shell and/or (with the consent of the Panel) any
members of the Shell Group having acquired or agreed to acquire, whether
pursuant to the Combination or otherwise, shares carrying more than 50% of the
voting rights normally exercisable at a general meeting of BG, including, for
this purpose, any such voting rights attaching to BG Shares that are
unconditionally allotted or issued before the Offer becomes or is declared
unconditional as to acceptances, whether pursuant to the exercise of any
outstanding subscription or conversion rights or otherwise.
Part D: Certain further terms of the Combination
The availability of the Combination to persons not resident in the United
Kingdom may be affected by the laws of the relevant jurisdictions. Persons who
are not resident in the United Kingdom should inform themselves about and
observe any applicable requirements.
The Combination will be governed by English law and be subject to the
jurisdiction of the English courts, to the conditions set out below and in the
formal Scheme Document and related form of election. The Combination will
comply with the applicable rules and regulations of the FCA and the London
Stock Exchange and the City Code.
Each of the Conditions shall be regarded as a separate Condition and shall not
be limited by reference to any other Condition.
Fractions of New Shell Shares will not be allotted to BG Shareholders but will
be aggregated and sold as soon as practicable after the Scheme becomes
effective. The net proceeds of such sale will then be paid in cash to the
relevant BG Shareholders in accordance with their fractional entitlements.
Individual entitlements, however, to amounts of less than £5 will not be paid
but will be retained for the benefit of Shell.
The New Shell Shares, which will be issued in connection with the Combination,
have not been and will not be registered under any of the relevant securities
laws of Canada, Japan or Australia and no regulatory clearance in respect of
the New Shell Shares has been, or will be, applied for in any jurisdiction
other than the UK, the Netherlands and, if applicable, the US. The New Shell
Shares may not be offered, sold or delivered, directly or indirectly, in
Canada, Japan or Australia except pursuant to exemptions from applicable
requirements of any such jurisdiction.
The New Shell Shares will be issued credited as fully paid and will rank pari
passu in all respects with Shell 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. Applications will
be made to the UK Listing Authority for the New Shell Shares to be admitted to
the Official List with a premium listing and to the London Stock Exchange for
the New Shell Shares to be admitted to trading. Application will also be made
for admission to listing and trading of the New Shell Shares on Euronext
Amsterdam.
BG Shares which will be acquired under the Combination will be acquired fully
paid and free from all liens, equities, charges, encumbrances, options, rights
of pre-emption and any other third party rights and interests of any nature and
together with all rights now or hereafter attaching or accruing to them,
including voting rights and the right to receive and retain in full all
dividends and other distributions (if any) declared, made or paid on or after
the date of this Announcement other than (i) the final dividend in respect of
the year ended 31 December 2014 of 14.37 cents (9.52 pence) per BG Share which
has already been announced by BG; (ii) any interim dividend in respect of the
six month period up to 30 June 2015 of not more than 14.38 cents per BG Share;
and (iii) if completion of the Combination occurs after the record date for
Shell's 2015 fourth quarter interim dividend, a further BG dividend in respect
of 2015 of not more than 14.37 cents per BG Share to which BG Shareholders
would be entitled.
If any BG dividend, distribution or return of value is declared, announced,
made or paid at any time in excess of those described above, Shell reserves the
right to reduce the value implied under the terms of the Combination at such
date by an amount equal to the excess amount (based on the $/£ exchange rate at
the time of such declaration, announcement, making or payment). In such
circumstances, to the extent possible, the cash component of the Consideration
would be reduced by the amount of such excess.
APPENDIX 3
SOURCES OF INFORMATION AND BASES OF CALCULATION
In this Announcement:
1. All references to BG Shares are to BG ordinary shares of 10 pence each,
references to Shell A Shares are to Shell A ordinary shares of €0.07 each and
to Shell B Shares are to Shell B ordinary shares of €0.07 each.
2. The aggregate value of the cash component of the Consideration of £13.2
billion is calculated by multiplying the offered amount of 383 pence in cash
per BG Share by BG's fully diluted share capital (as referred to in paragraph 6
below).
3. The aggregate value of the share component of the Consideration of £33.8
billion is calculated by multiplying the number of Shell B Shares to be issued
under the terms of the Combination (as referred to in paragraph 7(B) below) by
the price per Shell B Share of 2,208.5 pence (being the Closing Price on 7
April 2015, the last Business Day prior to the date of this Announcement).
4. The value attributed to the entire existing issued and to be issued share
capital of BG under the terms of the Combination of £47.0 billion is the sum of
the aggregate value of the cash component and the aggregate value of the share
component of the Consideration (as referred to in paragraphs 2 and 3 above
respectively).
5. The percentage of the share capital of the Combined Group that will be owned
by BG Shareholders of 19% is calculated by dividing the number of Shell B
Shares to be issued under the terms of the Combination referred to in paragraph
7(B) below by the issued share capital of the Combined Group (as set out in
paragraph 7 below) and multiplying the resulting sum by 100 to produce a
percentage.
6. The fully diluted share capital of BG of 3,439,117,047 BG Shares is
calculated on the basis of:
(A) BG's issued share capital as at the close of business on 7 April 2015
(being the last Business Day prior to the date of this Announcement) of
3,414,440,911 BG Shares (excluding 206,948,325 treasury shares); and
(B) 24,676,136 BG Shares which may be issued on or after the date of this
Announcement on the exercise of options or vesting of awards under the BG Share
Plans, as at the close of business on 7 April 2015 (being the last Business Day
prior to the date of this Announcement), but excluding any vestings, exercises
and lapses under the BG Share Plans since 31 December 2014.
7. The share capital of the Combined Group (being 7,866,778,228) has been
calculated as the sum of:
(A) a total number of 6,334,995,495 Shell Shares, being the sum of
3,894,584,881 Shell A Shares and 2,440,410,614 Shell B Shares in issue (as at
the close of business on 7 April 2015, the last Business Day prior to the date
of this Announcement); and
(B) 1,531,782,733 Shell B Shares which would be issued under the terms of the
Combination (being 0.4454 Shell B Shares to be issued per BG Share multiplied
by the fully diluted share capital of BG as referred to in paragraph 6 above).
On the date of this Announcement Shell holds no ordinary shares in treasury.
8. Unless otherwise stated, all prices quoted for Shell and BG Shares have been
derived from the Daily Official List of the London Stock Exchange and represent
closing middle market prices on the relevant date.
9. The premium calculations to the price per BG Share have been calculated by
reference to the 90 trading day volume weighted average price of a Shell B
Share of 2,170.3 pence and of a BG Share of 890.4 pence, and the Closing Price
of a Shell B Share of 2,208.5 pence and of a BG Share of 910.4 pence, as of 7
April 2015 (being the last Business Day prior to the date of this
Announcement).
10. The 90 trading day volume weighted average prices of a Shell B Share and of
a BG Share as of 7 April 2015 are derived from data provided by Bloomberg and
refer to trading on the London Stock Exchange only.
11. Unless otherwise stated:
(A) historic financial information relating to Shell has been extracted or
derived (without material adjustment) from the audited financial statements of
Shell contained in Shell's Annual Report and Accounts and Form 20-F for the
financial year ended 31 December 2014 or from Shell's management sources; and
(B) historic financial information relating to BG has been extracted or derived
(without material adjustment) from the audited financial statements of BG
contained in BG's Annual Report and Accounts for the financial year ended 31
December 2014.
12. The synergy numbers are unaudited and are based on analysis by Shell's
management and on Shell's internal records. Further information underlying the
Quantified Financial Benefits Statement contained in paragraph 6 of this
Announcement is provided in Appendix 5.
13. The timing expectations set out in this Announcement assume that the
Combination would be completed in early 2016.
14. Information relating to oil and gas production has been extracted from
Shell's Annual Report and Accounts and Form 20-F for the financial year ended
31 December 2014 and from Shell management information (in the case of
information relating to Shell) and from BG's Annual Report and Accounts for the
financial year ended 31 December 2014 (in the case of information relating to
BG). Forward looking production estimates have been compiled by Shell
management.
15. The information relating to Shell's proved reserves has been extracted from
Shell's Annual Report and Accounts and Form 20-F for the financial year ended
31 December 2014 and the information relating to BG's proved reserves has been
extracted from BG's Annual Report and Accounts for the financial year ended 31
December 2014. Shell's proved reserves estimates are calculated pursuant to SEC
Rules; BG adopts the reserves definitions and guidelines consistent with the
Petroleum Resources Management System published by the Society of Petroleum
Engineers. If the Combination is completed, the reserves of the Combined Group
will be determined and reported on an SEC basis. Accordingly, the reported
reserves will likely differ from the estimates provided for the Combined Group
and such differences could be material.
16. For the purpose of this announcement, Shell defines return on average
capital employed as income for the relevant period on a clean current cost of
supply ("CCS") basis as a percentage of the average capital employed for the
period. Forward looking assessments of the impact of the Combination on Shell's
return on average capital employed have been compiled by Shell management.
17. Shell's forward looking estimates of cash flow from operations by around
2020 have been compiled by Shell management and assume $90/bbl Brent oil prices
(on a 2014 real terms basis).
18. Shell management's assessment of the timing and size of share buybacks is
subject to progress with debt reduction and oil prices recovering towards the
middle of Shell's long term planning range of $70-$90-$110 per barrel.
19. Where amounts are shown in both US dollars and sterling in this
Announcement, an exchange rate of £1.00/US$1.4857 has been used, which was
derived from data provided by Bloomberg as at 4.30 p.m. London Time on 7 April
2015 (being the last Business Day prior to the date of this Announcement).
20. Certain figures included in this Announcement have been subject to rounding
adjustments.
APPENDIX 4
DETAILS OF IRREVOCABLE UNDERTAKINGS
Name of BG Director Number of BG Shares Percentage of BG issued
share capital (excluding
treasury shares)
Andrew Gould 65,000 0.001904
Helge Lund 16,771 0.000491
Simon Lowth 28,913 0.000847
Sir John Hood 8,795 0.000258
Vivienne Cox 4,557 0.000133
Pam Daley 32,000 0.000937
Martin Ferguson 57 0.000002
Baroness Hogg 18,466 0.000541
Caio Koch-Weser 3,600 0.000105
Lim Haw Kuang 5,087 0.000149
Sir David Manning 3,412 0.000100
Mark Seligman 22,126 0.000648
Patrick Thomas 8,780 0.000257
TOTAL 217,564 0.006372
APPENDIX 5
QUANTIFIED FINANCIAL BENEFITS STATEMENT
Part A
Paragraph 6 of this Announcement (Synergy potential of the Combination)
contains statements of estimated cost savings and synergies arising from the
Combination (together, the "Quantified Financial Benefits Statement").
A copy of the Quantified Financial Benefits Statement is set out below:
"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 costs of approximately $980 million incurred in the first
three years post completion to the end of 2018, of which approximately 65%
would be incurred in 2016 and 30% in 2017. No material costs are expected to
arise in relation to the implementation of the reduction in exploration
expenditure."
In identifying these synergies, the Shell Directors have formulated the
following bases of belief:
* Corporate,
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