Royal Dutch Shell said Wednesday it has agreed to buy BG Group for 47 billion pounds ($69.7 billion) in a cash and stock takeover.
A joint statement said the boards of both companies are recommending that shareholders approve the deal.
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Energy companies are looking to reduce costs and become more efficient in the wake of tumbling oil prices. One route is through consolidation via takeovers and mergers.
The terms of the offer would result in BG shareholders owning about 19 percent to the new combined business.
Shell said that bringing the two companies toward would produce financial gains of about $2.5 billion a year.