Sunday telephone call sparked $70 billion Shell-BG deal

Wed Apr 8, 2015 10:55am EDT
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By Dmitry Zhdannikov and Karolin Schaps

LONDON (Reuters) - Sometimes it takes little more than five people to put together a $70 billion oil mega-merger.

Shell's purchase of smaller rival BG, the third largest oil and gas merger ever, was prompted by a phone call on a Sunday in the middle of March between Shell's ambitious and acquisitive CEO Ben Van Beurden and BG's veteran chairman Andrew Gould.

Helping to make it happen were three bankers who have advised on some of the oil industry's biggest takeovers -- Alastair Maxwell from Goldman Sachs, Julian Mylchreest from Bank of America Merrill Lynch and former Morgan Stanley star deal maker Simon Robey, now with his own boutique firm Robey Warshaw.

That contrasts with smaller deals which would normally require a small army of bankers and advisers on both sides. It also shows that big mergers can be done at a lightning speed by senior executives with big ambitions.

Less than two months ago, Goldman's Maxwell played down the prospect of mega-mergers as oil majors were more focused on cost cutting and maintaining dividends.

By March, he was advising BG on the deal together with Robey Warshaw. BAML is the sole adviser to Shell.

Explaining how the deal came together in under a month, Van Beurden said on Wednesday: "I called Andrew (Gould) up and we had a very good and constructive discussion about the idea and it very quickly seemed to make sense to both of us".

That first call was made on March 15.   Continued...

Shell branding is seen at a petrol station in west London, in this January 29, 2015 file photo.  REUTERS/Toby Melville