How Much Value Will The BG Group Acquisition Add To Royal Dutch Shell?

Royal Dutch Shell Plc. (NYSE:RDSA), which completed its acquisition of BG Group (LON:BG) in February this year, has raised its synergy expectations from the deal from $3.5 billion to $4.5 billion in 2018. This is largely based on its plans to revamp its growth strategy and in anticipation of a recovery in crude oil prices over the next two years.

Source: Shell Capital Market Day 2016

By acquiring the BG Group, Shell has made a long-term bet on the growth in global LNG demand and the development of pre-salt crude oil reserves offshore Brazil. Although it will take a while for the Netherlands-based company to reap the benefits of the transaction, we try to access the present value of the synergies that the deal is likely to add to its valuation. Based on our analysis below, we believe that the BG Group deal is expected to generate more than $14 billion in value for Shell.

Have more questions about Royal Dutch Shell? See the links below:

• By What Percentage Can Royal Dutch Shell’s Revenues Grow Over the Next Five Years?
• What’s Royal Dutch Shell’s Revenue & Earnings Breakdown In Terms of Different Products?
• What’s Royal Dutch Shell’s Fundamental Value Based On Expected 2016 Results?
• How Is Royal Dutch Shell’s Revenue & EBITDA Composition Expected To Change in 2016?

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