Shell plans 2,800 job cuts in BG deal

December 14, 2015 11:27 am Published by

Royal Dutch Shell plans 2,800 job cuts after BG deal

  • 14 December 2015
  • From the section Business

Shell signImage copyright
Getty Images

Royal Dutch Shell has said it will cut 2,800 jobs if its planned takeover of BG Group goes ahead, about 3% of the combined group’s workforce.

The proposed job cuts are in addition to the 7,500 jobs losses Shell announced in July.

The tie-up between Shell and BG deal is due to be completed early next year.

However, an institutional investor has told the BBC that the deal does not make “financial sense” at current oil price levels.

David Cumming, head of equities at Standard Life Investments, told the BBC it was “very difficult to make the deal work” with oil below $40 a barrel.

He said oil prices needed to be $60-$70 a barrel for the tie-up to work. Standard Life is among the top 20 investors in both companies.

‘Under pressure’

The final regulatory barrier to the tie-up was cleared on Monday after it was approved by China.

It has already been approved by regulators in Australia, Brazil and the European Union.

Shell chief executive Ben van Beurden said the companies would now “seek approval from both sets of shareholders as we move towards deal completion in early 2016”.

Shell announced in April that it had agreed to buy BG, in a deal that valued the oil and gas exploration firm at about £47bn.

Last week, the price of oil fell to seven-year lows, with both Brent crude and US crude now below $40 a barrel.

Mr Cumming told the BBC’s Today programme that given the low oil price, possible options included Shell walking away from the deal, Shell changing the terms of the deal, or shareholders rejecting the deal.

“Shareholders could vote the deal down, and the break fee is pretty low, so I think Shell will come under pressure over the next few months to say how the deal is going to work,” Mr Cumming added.

Mr Cumming declined to say how he would vote on the deal.

Categorised in:

This post was written by FSB News