LONDON (Alliance News) - Standard Life Investments said it is planning to vote against Royal Dutch Shell PLC's merger with rival BG Group PLC, saying the terms of the current deal would be "value destructive" for Shell's shareholders.
"We have concluded that the proposed terms of the acquisition of BG are value destructive for Shell shareholders. This view is based on the downside risks to Shell?s oil price assumptions plus the tax and operational risks surrounding BG?s Brazilian asset base. Consequently we shall vote against the deal," said David Cumming, head of equities at Standard Life Investments, the investment management arm of FTSE 100-listed Standard Life PLC and a prominent City investor.
The news comes after the Financial Times last week said Institutional Shareholder Services, a key proxy advisory body, had advised shareholders to vote in favour of the deal. Shareholders use ISS to advise on potential takeover deals and other significant transactions.
A meeting for shareholders to vote on the takeover is due to take place on January 27 at Shell, while BG shareholders will vote the next day.
"We have engaged with Shell to explain our views and to encourage them to re-negotiate. By voting against in respect of our clients who have an interest in Shell we are sending a clear message to Shell's board, reinforcing our opposition to the deal on the proposed terms," added Guy Jubb, head of governance and stewardship for Standard Life Investments.
Standard Life holds 0.4% of Shell's 'A' shares and 1.7% of its 'B' shares.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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