Energy giant Shell said it has agreed to buy oil and gas exploration firm BG Group in a deal worth around £47 billion.
In a joint statement, the two firms said Shell would pay a mix of cash and shares and allow BG Group shareholders to own 19% of the combined group.
If approved by shareholders and regulators, the deal will be one of the biggest transactions of the year and the first major merger between energy firms in at least a decade.
The agreement will add around 25% to Shell’s oil and gas reserves and 20% to production as well as provide it with “enhanced positions” in competitive new oil and gas projects, particularly in Australia LNG and Brazil deep water, the company said.
It also expects to make annual savings of around $2.5 billion (£1.7bn) following the deal and invest £4 billion between 2016 and 2018.
Ben van Beurden, Chief Executive of Shell said: “Bold, strategic moves shape our industry. BG and Shell are a great fit. This transaction fits with our strategy and our read on the industry landscape around us.
“BG will accelerate Shell’s financial growth strategy, particularly in deep water and liquefied natural gas: two of Shell’s growth priorities and areas where the company is already one of the industry leaders.”