M&A Boom In The Energy Sector?


mergers oil


Ever since the acquisition of BG (BRGYY) by Shell (RDS-A), takeovers in the energy sector are a hot topic: when will the next merger be? Giving a plausible prediction regarding this matter is not that easy according to Matthew Beesley, head of global equities at Henderson Global Investors.

Although the acquisition of BG by Royal Dutch Shell lead to speculations about an M&A boom in the energy sector, Beesley doesn’t see this deal as a sign of what is to come, but as a special situation that brought a willing buyer and seller together. He doesn’t feel like this will bring about a wave of mergers and acquisitions in the energy sector.

Consolidation in the energy sector

Another consolidation phase among energy players is unlikely in his opinion. Furthermore, big oil companies are also having a tough time finding takeover candidates in the North American exploration and production sector that would save them money. Most companies are not likely to sell their assets, moreover, at levels they regard as the bottom of the current commodity cycle.

Beesley is personally keeping an eye out for possible takeovers that would not require issuing a large amount of shares or, as in the case of big oil companies, without affecting the current dividend policies. The deal between Shell and BG, for example, was as big as possible without damaging the credit score and the current dividend policy of Shell.

Companies active in the US oil and gas sector that have recently had changes in management or companies that could profit from a new strategy are potential takeover candidates as well. Beesly mentioned Apache and Anadarko Petroleum as 2 names to keep an eye on in that regard.

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