Fitch: Royal Dutch on watch, BG on positive watch

Fitch Ratings said it placed Royal Dutch Shell’s ratings on Rating Watch negative and BG Energy Holding’s ratings on Rating Watch positive following confirmation that the acquisition of BG by Shell has been agreed by both companies’ boards.

The ratings on negative watch include Royal Dutch Shell’s long-term issuer default rating of AA and senior unsecured debt rating of AA, along with Royal Dutch/Shell Group’s long-term issuer default rating of AA and senior unsecured debt rating of AA. Shell International Finance’s senior unsecured debt rating of AA also is on negative watch.

The ratings on positive watch include BG Energy Holding’s long-term issuer default rating of A- and short-term issuer default rating of F2, along with BG Energy Finance Inc.’s short-term debt rating of F2 and BG Energy Capital plc’s senior unsecured rating of A-, short-term debt rating of F2 and subordinated hybrid debt rating of BBB.

The agreed terms of the merger assume a total consideration of about $70 billion, including $20 billion in cash, Fitch said.

The acquisition is pending approval from shareholders and various regulatory authorities, the agency said.

Fitch said it will resolve the Rating Watch on both companies if the deal is completed and once there is greater clarity on Shell’s post-acquisition strategy and potential synergy effects.

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