File - A flag bearing the company logo of Royal Dutch Shell flies outside the head office in The Hague, Netherlands.
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Royal Dutch Shell agreed to buy smaller rival BG Group for 47 billion pounds ($70.2 billion) in the first major energy industry merger in more than a decade, closing the gap on market leader U.S. ExxonMobil after a plunge in prices.This is a hefty premium of around 52 percent to the 90-day trading average for BG, setting the bar high for any potential counterbid by a company like Exxon, which has said it would also use the oil markets downturn to expand.Shell said Wednesday the deal would boost its proven oil and gas reserves by 25 percent.Britain's BG had a market capitalization of $46 billion as of Tuesday's market close, Shell was worth $202 billion while Exxon, the world's largest energy company by market value, was worth $360 billion.BG's bonds traded up strongly on the deal and its shares leapt 35 percent to 1226 pence by 11:05 GMT. Shell's shares were down 2.5 percent at 2040 pence. Analysts at investment bank Jefferies said they now expected Shell to surpass Exxon as the world's largest publicly traded oil and gas producer by 2018, with output of 4.2 million barrels of oil equivalent per day.
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