Shell wins final Australian approval for its takeover of BG

Jessica Morris
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Shell has satisfied four out of five pre-conditions for the deal to go ahead (Source: Getty)

Oil major Shell has received the final nod from an Australian regulator for its proposed $70bn (£47bn) acquisition of BG group, meaning China is now the last regulatory hurdle it has left to clear.

Approval from Australia's Foreign Investment Review Board means Shell has satisfied four out of five pre-conditions necessary for the deal to go ahead. The company added it still expects it to complete in 2016.

Shell had already won approval from the Australian Competition and Consumer Commission, as well as competition bodies in Brazil and the European Union. It now needs to get a green light from China's Ministry of Commerce.

"I am very pleased to receive this news. The Foreign Investment Review Board approval is an important step towards deal completion," Ben van Beurden, chief executive of Shell, said.

But the approval from Australia's Foreign Investment Review Board included an unusual condition to prevent disputes between the Australian Taxation Office and the merged group.

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It will require Shell to agree with the tax office how it will approach transfer pricing, loans between different arms of the company and other issues before filing tax returns from the merged group.

Australia is currently trying to clamp down on profit shifting and tax avoidance by big multinational companies.

"I have approved the ... proposal by Royal Dutch Shell to acquire BG Group, subject to the condition that Shell provides an ongoing commitment to engage with the ATO in a transparent manner regarding its tax affairs in relation to acquistion of BG and integration of BG into Shell's operations," Australian treasurer Scott Morrison said.

Van Beurden added: "The addition of BG's integrated gas assets in Australia to Shell's global portfolio is one of the main strategic drivers behind the recommended combination. The Shell-BG combination is a sign of Shell's confidence in the Australian economy," van Beurden added.

"It is also a springboard to change Shell into a simpler, more profitable and resilient company."

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