Shell in Talks to Buy BG Group

Shell in Talks to Buy BG Group

Deal for gas producer, which has $46 billion market cap, would be one of year’s biggest

Royal Dutch Shell is in talks to acquire BG Group, according to people familiar with the matter. PHOTO: ASSOCIATED PRESS

By

DANA MATTIOLI And SHAYNDI RAICE/WSJ

Updated April 7, 2015 4:32 p.m. ET

Royal Dutch Shell PLC is in talks to acquire BG Group PLC, according to people familiar with the matter.

BG, a gas producer, has a market capitalization of £31 billion ($46 billion), meaning a deal for the company would be one of the year’s biggest.

It would be a rare megadeal in the energy patch, where oil prices have declined sharply since the summer. In the first quarter, there were only $19.1 billion in oil and gas deals, according to Dealogic.

A deal of this size also would solidify what was already shaping up to be a banner year for mergers and acquisitions. In the first quarter, deal volume rose 24% to $874.1 billion globally.

In February, BG Group said it was writing down the value of its oil-and-gas assets by nearly $9 billion, as the company adjusts to the plunge in oil prices.

Shell also has taken steps to adjust to lower commodity prices. In January, the company said it would curb its planned spending over the next three years by $15 billion and scale back on shale investments.

Shell has a market capitalization of $192.4 billion.

Write to Dana Mattioli at dana.mattioli@wsj.com and Shayndi Raice atshayndi.raice@wsj.com