Shell plans 2,800 job cuts after BG takeover

Shell plans 2,800 job cuts after BG takeover

12:02 PM, 15th December 2015
Shell plans 2,800 job cuts after BG takeover
Ben van Beurden, Chief Executive Officer, Shell. (File photo)

THE HAGUE, NETHERLANDS: Royal Dutch Shell said that it will cut 2,800 jobs after its takeover of BG Group, about 3 percent of the combined group’s workforce. The proposed job cuts are in addition to the 7,500 job 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 that the deal does not make financial sense” at current oil price levels.

“Very difficult to make the deal work” with oil below $40 a barrel, saying oil prices needed to be $60-$70 a barrel,” said David Cumming, head of equities at Standard Life Investments.

In its latest statement, Shell said that the planned job losses were part of “operational and administrative restructuring.”

“Further detailed work will be undertaken on the details of the proposed restructuring as part of ongoing integration planning,” Shell said.

The final regulatory barrier to the Shell-BG tie-up was cleared after it was approved by China. It has already been approved by regulators in Australia, Brazil and the European Union.

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

Speaking before Shell announced the plans for job cuts, Cumming said - 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,” Cumming added.

© BBC News



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