Tell Sid he’s made a fortune!
£47bn gas takeover deal sees 30% jump in value of shares
HUNDREDS of thousands of people who bought British Gas shares in the 1980s are in line for a windfall after their investment soared in value last night.
The shares are one of the most popular in the UK due to the hugely successful ‘Tell Sid’ advertising campaign when British Gas was privatised.
Last night shares in what is now called the BG Group rose by nearly 30 per cent to 1,153p.
The rise came after the oil giant Royal Dutch Shell announced plans to buy BG Group in a £47 billion deal. It is one of the biggest takeovers ever.
News of the deal has driven up the price of shares in BG now owned by people who originally bought British Gas shares in 1986. British Gas was privatised by Margaret Thatcher’s government after a widely publicised ‘Tell Sid’ campaign. The share sell- off, which encouraged people to spread news of the offer with the slogan ‘If you see Sid, tell him’, saw more than 1.5million people pay 135p a share when the company was listed on the Stock Exchange.
In 1997 British Gas was split in two to form the oil explorer BG Group and the British Gas owner Centrica. Shareholders received shares in both companies.
Those investors who retained these shares have since received hundreds of pounds in dividends. Anyone who bought 100 shares at the time of privatisation would have paid £135 (£366 today, after taken inflation into account). The holding across the now separate companies of Centrica, National Grid and BG Group, is currently worth more than £1,604. The proposed Shell takeover will mean investors are now due 383p for every BG share they own. Investors will also be in line for higher divi- dends. But the windfall pales in comparison to the rewards for BG Group’s newly-arrived chief executive Helge Lund who could be in line for more than £30 million in pay and perks if the deal completes next year. Mr Lund was poached by BG to help turn around the group and started in February, just weeks before talks to sell the business began.
The takeover, which will create a company valued at £200 billion, could be the first of many in the oil sector as the falling oil price, means firms are vulnerable to predators.
The bid has been months in the planning. Shell ‘ran the numbers’ on BG, Britain’s third largest energy company, last year as its share price has fallen by a fifth since the oil price crash.
Shell’s chief executive Ben van Beurden made a call to BG’s chairman Andrew Gould on Sunday March 15 and a ‘cloak and dagger’ meeting took place at the Dorchester Hotel last month. He described the deal as a ‘fantastic fit’ and said the ‘logic’ to buy BG has always been there but that the falling oil price made it a ‘whole lot more compelling’.
The deal will have to be approved by a series of regulatory bodies worldwide including the European Commission.
Shell employs more than 94,000 people across 70 countries. BG has 5,200 staff across 24 countries. News of the merger led to job fears.
In the UK Shell has around 6,500 staff while BG employs around 1,600. Shell is in the process of laying off 500 people at its North Sea operations where old oil fields are becoming too expensive to operate.
‘Falling oil prices sealed the deal’