Financial Trading Blog
Stock of the day 07/05/2015 – BG Group PLC
After starting 2014 at £13.18 BG suffered the way most energy companies did towards the end of last year, ringing in 2015 at £8.76 following the protracted, and still ongoing, oil price crash. In fact, the company had almost lost half its value within a year when it hit a low of £7.85 in the middle of January. However, the weakened oil sector meant there was some prime pickings for the M&A hungry, and Royal Dutch Shell satisfied this need on April 8th when it announced it was buying the company for £47 billion ($70 billion), sending BG rocketing to £13. The excitement has died down somewhat since then, leaving BG at a current trading price of £11.87.
(Source: IT-Finance.com 07/05/2015)
Since the deal was announced BG has been under scrutiny of late for the absurdly large payment CEO Helge Lund will receive once Shell consumes BG. Despite only taking 2 months before the Shell takeover was announced, Lund is likely to pocket anywhere between £25-£31 million for his services, even though they will not be required by BG’s new overlords when the deal is confirmed. Understandably investors have been incensed by the news, which has added a black mark to what was otherwise a well-received move by the company. Lund has claimed he had ‘mixed emotions’ about taking Shell’s offer, emotions likely soothed by the size of his pay-out.
Obviously that Shell takeover has dominated the discussion around BG since April, and will be at the forefront of investors’ minds come Friday. Few details have been announced and investors will be clamouring for clarification over job cuts and restructuring when BG announces its results.
In terms of BG’s actual first quarter figures, analysts are expecting revenue of $15 billion, compared to $4.42 billion last quarter, with net income of $1.33 billion against $915 million last quarter. However, without concrete details of the takeover analysts remain tentative over the stock, giving BG a consensus rating of ‘hold’ with an average target price of £11.81.
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