BG Group’s eroding market value could attract “opportunistic” buyers

Falling share price

UK natural gas company BG Group Plc (LON:BG), with a current market capitalisation of USD60bn (EUR45bn), could become a takeover target for big oil firms, following a decline in its valuation by half in less than two years, Bloomberg cited today analysts as saying.

BG, which reported a 26% decrease in its stock price last year, expects project delays to impede its output growth in 2013. Jane Coffey, head of UK equities at investment manager Royal London Asset Management (RLAM), told Bloomberg that there was a danger for the UK firm to be bought by an “opportunistic” large company at a very cheap price.

According to UK investment manager Brewin Dolphin Ltd, US oil group Exxon Mobil Corp (NYSE:XOM) could be interested in BG to help it revive its growth. Nplus1 Singer Advisory LLP believes that UK’s BP Plc (LON:BP) could welcome a combination with BG as it would enable it to contest the European leadership of Anglo-Dutch oil major Royal Dutch Shell Plc (AMS:RDSA).

Neil Burrows, a spokesman at BG, refused to say whether the company was considering a sale. Patrick McGinn, a Houston-based spokesman for Exxon, did not wish to say if the company was interested in buying BG. Bloomberg could not extract a comment from Sheila Williams, a London-based spokeswoman at BP, either.

China Petroleum & Chemical Corp (HKG:0386), or Sinopec, Cnooc Ltd (HKG:0883) and China National Petroleum Corp (CNPC) are also considered to be among the interested buyers. Bloomberg could not contact representatives of the three Chinese companies outside normal business hours.

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