Im guy johnson. Francine lacqua is off today. We begin with the mega oil deal. Shell has agreed to buy bg group for around 47 billion pounds around 70 billion in cash and stocks. That makes it the biggest deal in the oil and gas industry for at least a decade. Caroline hyde joins us at the touchscreen. Caroline a cool 47 billion pounds. A cool 50 premium on bgs share price. This is record data in terms of size of move, but if you go back, it is only since july 2014 when we last saw this price on bg group. That was the amount that the oil prices plummeted dragging down the price of oil stocks. Suddenly, everything looks a little bit fairer valued. That is what has capitalized this deal to spark the Biggest Energy deal in a decade. Suddenly, assets look well priced. Creating the secondBiggest Energy company in the world this would be the biggest player in the ftse 100. It will have sheer size and scale. Interestingly, shell saying, we will build a company with three pillars. They are going to reorient themselves. Why are they getting into this . Why go big on gas . They are betting on energy betting on gas and the reserves. They are going to boost their overall reserves by 20 . We have seen Shell Production at the lowest in 17 years. Reserves have fallen two of the three years. Bg was on the up. They boosted than six out of seven years. They want to diversify themselves, not only in the fuel they are offering, but where they have them geographically. Brazil, mozambique, australia. It links in with liquefied natural gas. This is a cleaner type of fuel. Also, they have australia. They have reserves waiting to be harnessed in australia. they can access shellss australia reserves. Clearly, this is the expertise they want to bring in. Also, will the spark another wave of m a . We are seeing the oil and gas sector of the most since 2009. We are seeing perhaps people think about bp. Tullow oil, will they be next . The First Quarter was the worst in terms of m a. The opportunities are aplenty. Guy thank you very much indeed, caroline hyde. The ceo of shell spoke to Jonathan Ferro about this big bet on gas. We see gas also as a very important fuel for the future. This is a fuel that does 50 less Carbon Dioxide emissions than coal. We are seeing gas to be very important, even a destination fuel for many decades to come. Guy Ben Van Beurden speaking to Jonathan Ferro earlier on. One derivative effect of this is that we have pushed the stoxx 600 into record territory. The last time we were here was the peak of thedotcom here was the peak of the dotcom boom. You have most of the Energy Sector higher this morning. Lets talk about this transaction in a little more detail. Lets bring in Bloomberg News managing editor tim coulter. We just explained why shell wants this. Why are they doing it now . Tim shell has wanted this asset for years. Bg was always too expensive. It always traded at a large premium to its peers. That was their defense card. At a time of stable or rising oil prices, it was too hard for shelter justify it. Caroline just said this is the highest price for bg shares since july 2014 only. Once they stumbled, they became a vulnerable target. Jonathan the reason they guy the reason they stumbled was for execution, but also management turbulence. Tim they were without a ceo for quite a while. The chairman stepped in. Guy he made a nice turn. Tim we are still trying to figure out how big that is. Guy run us through how these two companies fit together. Once the deal is closed and they start putting these companies together, where are the real benefits and where are the real jules jewels that shell is going to find . Tim brazil, bg has some great assets there, some of the largest discoveries offshore in decades. Australia is a big one too. Bg has spent several billion dollars starting up the queensland Curtis Energy project. That is the first coal steam gas Energy Project in the world. The first train is starting up now and the second line is coming this year. Next year bg is going to start exporting lng from the United States as well. Guy this happened quickly. How quickly do you think it happened behind the scenes . Do you think this deal was one that took months to gestate or it happened over a matter of weeks . Im surprised they kept it a secret as long as they did. Shell has always talked about doing things opportunistically. When did the lightbulb moment happen . Tim thats a really good question. We can only speculate. We havent been able to get to the bottom of that yet. It probably did happen fairly quickly behind the scenes. Shell has been planning this for quite a while. They saw the opportunity. It would suggest that no approach has been made before. Guy why would you hire a new ceo if you are making a transaction like this . Tim exactly. Guy others going to be doing the same thing . As soon as the oil price started falling, people talked about the fact that you could get cheaper assets on the stock exchange. Are there other deals coming . Tim you would certainly think so. You can look back to 1998. Bp bought amoco. We saw shell by texaco. Shell bought mobile. Guy so this could be the starting gun being fired. You think it will bring forward some of those transactions . Do you think anybody else might bid for bg . Or is shell the best fit . Tim it would seem unlikely that anyone else would come for bg but there are a lot of assets that are cheaper than they were 1218 months ago. Guy if you were china, australia, i filled up a map and most of them were in asia. How do you think the chinese authorities will feel about this . Do you think there will be concern about surrounding the company with exposure to lng . Tim it will be interesting to hear what they say. They probably will try to get their pound of flesh. Whether they succeed is a different question. Shell will be the Biggest International oil company in lng but you have state producers like qatar petroleum. Guy im presuming that if you put this transaction together, you would be thinking asset disposals. Do you think they want to offset areas where they are really strong and dispose of assets . What kind of synergy story do you think we are looking at . Tim they have to divest some things. Bgs biggest Production Base today is in the u. K. The legacy of being part of british gas. That is obviously a very much or asset. Every oil maker has been trying to sell assets for quite some time. Guy this will make the u. K. Government quite nervous. Will job cuts be you are highlighting the u. K. We are in elections. Job cuts are potentially part and parcel of this. If there is such a big footprint in the u. K. , shell must be thinking, we are already trying to get out of some u. K. Assets. We want to maybe exit some of those positions more aggressively. Tim there probably will be some job cuts. Will they be massive . You dont think of oil and gas as a major employer. Guy thank you very much indeed. Tim coulter joining us from Bloomberg News. We will have much more on this story as the day progresses. We will provide you more analysis. Tim is working on some interesting stories. How much did he make our by our . Maybe day by day is the right metric. Nice little payday potentially coming his way. Lets look at what is on the radar. 40 of flights in and out of paris airport today may be affected by a planned air Traffic Controller strike. French airspace is the busiest in europe. The strike will affect Airlines Using the airspace as well as those flying through french airports. The bank of japan is maintaining its stimulus policy at an annual pace of ¥80 trillion. That is 663 billion. Cheaper oil and a weaker recovery from the recession is challenging governor kurodas attempts to reach the 2 inflation target. Ed miliband is announcing that a labor government would abolish the nondomicile rule that allows some wealthy individuals to limit tax they pay. He says the scheme has been wide open to abuse. He said around 100,000 people use the nondom rule, which is unique to the u. K. Much more on the nondom rule throughout the show. It will be the subject of our politics show. Tune in for that a little bit later. Our twitter question of the day is, is ending the nondom rule a good idea for the u. K. . Tweet us your answers. Still to come, the journey to moscow. We will look at the motive behind the greek Prime Ministers visit to russia. Guy the greek Prime Minister is heading to moscow to meet with president putin. Could the business threaten greeces relationship with brussels and berlin . Lets bring in hans nichols. What the you think Angela Merkel of this trip . Hans she things it is a sideshow. That is according to three of her Government Officials. Earlier, a german official did say that no one would really mind if russia lifted their sanctions on eu exports for greece for the agricultural products. You could see the emergence of some sort of agricultural deal am aware russia allows those exports from greece to russia. They may be also looking to give them some discounts on gas. The question is, what do they want in return. We know sanctions are up at the end of june. They will need unanimity among the eu. You may have some russia pressure to end the sanctions. Will greece stay with its european allies . That is on everyones mind here. One final note on this, we did have a Government Official saying that greece was not going to request Financial Assistance from moscow. We may have some bilateral deals on national gas, may have some restrictions on fruit being lifted, but right now, that looks about it. Guy homes, thank you very much indeed. For more on the greek story the former Deputy Foreign joins us now for an interview. What is your assessment of the reason for this trip to moscow . It has a lot to do with internal consumption. It has a lot to do with her with frustrations with the European Union. It will try to get some easing of restrictions for great agricultural products. But nothing more than that. I think greece is very steady in its commitment to stay within the european zone of influence the European Union, and the euro. There shouldnt be more red into this visit than other than what we just said. The germans, by the sounds of things arent reading too much into it. Nevertheless, at a time of such delicate negotiations, you wonder why a meeting of this kind is necessary and whether or not it sends maybe the wrong message to greeces eurozone partners. Petros im sure they have already talked about it and im sure that greece has assured its partners that nothing else should be read from this. Greece has three major problems. One is the liquidity problem, meeting its obligations to pay salaries and pensions, and also pay its European Partners for the loans. The second problem is how to turbocharge the economy which is completely stagnating. There is no investment, not much in terms of commerce and sales, and the third is the major banking problem that we are being faced with. The greek banks have 75 billion euros financed by the european and they need a Capital Increase in addition to all the Capital Increases that happened the tune of 1520,000,000,000. It is really interconnected with europe. Theres no way of actually getting away from europe and into the russian fold. The greek government realizes that. The visit to russia has a lot to do with internal consumption, trying to inc. Something in terms of discounts, getting some sort of easing of agricultural exports from greece to russia. Keep in mind that even in 2008, when the former Prime Minister visited mr. Putin it was very clear that russia did not intend to meddle in their affairs. I think this policy still holds. I dont even think mr. Putin is interested to create another sort of trouble for the sake of breeze. We shouldnt read too much out of it. The Prime Minister is trying to sharon the greek trying to show the greek population that he is using every possible venue. Guy you said maybe this is internal policy partakes Party Politics as well. What is your take on how stable syriza is . If hes going to moscow to appeals the left wing of the syriza party, what does that say about how stable that party is . Petros it is actually very unstable. About 25 of the members of parliament see it as completely out of tune with global realities. The Prime Minister is finding a very delicate balance between his more conservative majority and his more radical leftwingers. I think he will sooner rather than later have to face this sort of dichotomy, this dilemma and try to form a more wideranging government, trying to get the party into his fold just to counterbalance his leftwing tendencies, which are completely devoid of any reality of what is going on in the world. There are some people that think we should go back to the drachma, which would be catastrophic for the greek economy. They are still a minority, but a very powerful minority. The bulk of the population says yes, lets have more measures as long as we stay in the euro. Guy when do you think that is going to happen . If we dont get a deal on the 24th, if we dont get greece being provided with additional funding, do you think that is the catalyst for that to happen . Do you think we need new elections orrery formation of the government at that stage . Petros it appears that europe is showing a lot of patience with us. We are delaying muchneeded reforms. I think ms. Merkel is trying to avoid having to be blamed for a small country like greece. Most incomes and salaries have dropped by 35 in greece in the past 34 years. Imagine you told your british compadres that next year they will have to have a 10 reduction in their income. You would have a revolt. Greeks have taken a lot of heat. The europeans try to be more understanding. They are giving the government more time to sort out its problems. I think by this time in may lets say a month and a half from now, mr. Tsipras will have to bite the bullet and decide what hes going to do with the leftwingers. The more he moves to the right the more credible his government will be. If we start having problems without being able to pay or we have to pay either salaries or the loans that are coming due, then i think this government may be shortlived and he may have to ask for elections sometime even in june. My feeling is he will try to get his problems with his leftwingers resolved and get more parties into his government. Guy Petros Doukas in fairly short order. Thank you very much indeed for your time. Fascinating to get your insight. Coming up, more on the Monster Energy deal between shell and bg. The ceo has been speaking to bloomberg. We will bring more of his comments on that deal. Guy welcome back. The stoxx 600 in europe, i want to show you a chart. We are now in record territory. The last time we were here was back in 2000. Ignore that little bump on the right side of the chart. That is 20062008. The last time we were at these levels was back in 2000. Climbing nicely. Guess what is gearing it up for us . The Energy Sector. After the break, more from the shell ceo. Guy welcome back. Youre watching the pulse live from bloombergs london headquarters. Im guy johnson. My colleague, Francine Lacqua is off today. She will be back soon. These are the headlines. The biggest oil and gas industry deal in more than a decade, shell set to buy b. G. Group. 40 of flights out of paris airports could be affected by the planned air Traffic Controllers strike. French air space is the busiest in europe. The strike will affect Airlines Using the air space and those cycling through the french airports. Vivendi is denying the report it is looking at skie sky as one of several options to expand its business. The big story of the morning, shell agreeing to buy b. G. Group for 47 billion pounds. The acquisition will make a Monster Energy company. We spoke with shell c. E. O. Ben van beurden earlier this morning. I think we have been looking at b. G. For a long period of time. It really worked well in our mind. Two companies coming together. We would combine the two, add to that, the capabilities that we have as a leader in two areas. This was always going to be a fantastic combination. What happened over the last month is that the macro involvement to a point, it was a great logic and became a very compelling value. Together combining, the synergies, this became something that looked too good to pass up on and that is why we moved as we did. Is that an expensive way of saying the collapse of the oil price helped drive this deal . Of course the collapse in the oil price has done a bit for the sector. Considerations always tend to happen when the oil price comes down and there is a different evaluation. The way we would look at it, the combin of the two companies, what we could do with the fantastic assets that b. G. Has with our capabilities applied to them we simply saw a lot more value if that combination than in the marketplace. That value drove the deal at this stage. Guy jon, as you pulled out the highlights from that conversation, what were they . Jonathan i guess youre looking at a big boost to the energy market. Asked him what the energy boost meant and these are decades long decisions. He told me this will be a fuel destination for years to come. When you look at the premium paid it feels rich but you look at the market cap of this company at the start of last year. B. G. Was running below 47 billion pounds. They are paying a decent price for this. They are getting a good price because of the energy collapse. Guy good price. They said they were going to be opportunistic. They said they always looked at b. G. Jonathan there is a story there. Guy you have to assume and we were talking about this earlier. You have to assume that the deal has been fairly short in its jestation. If you were b. G. You would not have hired if you thought a deal was in the works. You wouldnt need a new c. E. O. Jonathan were in a pure speculate i point. My thoughts on that, maybe you would if you thought that was the guy to get the deal done for you. Guy maybe. It would come with a very expensive price tag, though. My assumption is you could do it more cheaply. While shell looked to it for a long time, i think they executed on it fairly quickly. You look at how quickly it happened overnight. There is an offer on the table. The oil industry tends to be quite good at keeping strets but this has happened fast. Jonathan it happened fairly quickly but so did the collapse. It started last june and six months later they start talks. We saw the collapse in the oil crisis happened very, very fast. Guy february, march, april. Three months. Jonathan three months to get a deal done. You and i are speculating here. We think. We have to talk to the man himself. Guy he is going to be picking up three months work. This has got to be one of the best c. E. O. Positions. Jonathan im sure they will break it down from minute to minute. Guy you can almost do it on a minute by minute basis. How much he was paid. Jonathan what does it mean for everyone else . You look at the share prices. B. G. Surging high. Shell a little bit weak. Guy this comes back to my question how quickly this has happened. I think people will rush now to catch up 3. Looking at the share price, i dont think anyone else is going to come for b. G. Its logical place is with shell. Nevertheless everybody is trying to put a deal together. Everybody is now looking at the premium being paid here and they will be thinking we need to get this done before the m a premium starts to build properly back into the market. Jonathan a year is a long type. I think this has time. As journalists we have been in for a treat. We get the deal that everyone has been waiting for. Guy the q. E. Effect jonathan the q. E. Fect, the first six months. The m a getting us over the line somewhat. Guy jon ferro. Coming up, were going to take a break and then talk about cracking down on ed mill band with a major tax proposal. Well preview his speech later on. Ill see you in a moment. Guy 40 past the hour. Welcome back. These are the Bloomberg Top headlines. U. S. s top Homeland Security commander warned north korea has deployed a new missile. The remarks are the strongest to date by u. S. Militaryry officials about the status of the missile but the official added if it were fired at the u. S. He was confident that the u. S. Forces could knock it out of the sky. The japanese owner of the hello kitty cartoon said the data of more than 6,000 shareholders may have been leaked. They are investigating the data which they used to register shares fell over 4 before recovering in tokyo trading. Ed miliband is announcing today the government will abolish the domicile rule. He said it offends the moral basis of taxation. The vule unique to the u. K. They will be talking more about this on our politics show which starts at 11 00. I will be joined at that point by my colleague, anna edwards. What are we expecting him to say . Anna he will be speaking at Warwick University. He will talk about getting rhode island rid of the nondom status. He will say there are by labors calculations 100,000 nondoms in the u. K. It can no longer be justified. It makes britain a an offshore tax haven. This was a law that was created some 200 years ago. 1799 by william pitt the younger. It helps some avoid tax on profits made overseas. Todays application is very different to that. It means you avoid tax on foreign earnings if you prove you are nondomicile. That is not to say youre not a resident or that youre not british. It is a spiritual remps. You can avoid tax on your nonu. K. Earnings. Proving that requires a connection to your fathers line. It could be not that you were born overseas but rather your father or grandfather was. Getting an idea of some of this old fashions Old Fashioned terminology. After seven years you to pay an annual charge to have this status and the tax benefits that it brings. Guy . Guy how it is going to work afterwards and how extreme is this manifesto pledge. How does it work . Anna there will still be a thing called temporary residencey. They are going to consult on whether that is going to be four years. During that period you will be exempt from paying any tax on foreign earnings. Those who want to suggest this is not a big policy shift, those to the right of u. K. Policies suggest this is still going to be a sort of nondom tax status. You wont be able to pay a charge to exempt yourself from paying that tax in the u. K. On those foreign earnings out into the future. Thats what the labor party would like to introduce. They have been saying the number of nondoms has exploded under labour. I spoke to a tax expert earlier on and she said that the u. K. Has always been a bit of an out liar in terms of this nondom policy. Well talk more about that on the politics show, guy . Guy well take the speech live from Warwick University. As anna says, we are back at 11 00 london time le for more on labors nondom proposal, were joined by russ walker. Good morning. Good morning. Guy does it have an economic orifice cal impact . Russspos russ it could have a deficit around 65 billion pounds. It really doesnt go any it would not go any significant way to closing that. In itself it may play well politically but im not sure maker economically comboip there is a great thrust within this Election Campaign to talk about tax avoidance and evasion. If there was a serious effort made to deal with those issues, how significant would that be . This may be just one part of that. The broader tax evasion, avoidance story, how does that fit in . Ross for years all parties have talked about clamping down on avoidens and evasion. When more money needs to be demonstrated, how this can be raised. Im skeptical. This is the sort of deficit that were running. I think it is a bit of a side show in terms of the fiss wall problems that the u. K. Has. Guy the fact that google was almost named in a law recently to target companies that maybe are offshoring their profits. Ross the u. K. Has low ratesor corporation tax. Corporations are much more mobile. There are efforts to try to extract tax from the googles and amazons of this world. How much that actually generates in extra revenue remains to be seen. I think it would not be a prudent choice to rely on those revenues. Guy there has not been much in the conversation about productivity. That is the one area to me that the u. K. Would see a dramatic improvement in its fiscal story. Ross the economic debate has been overwhelming when we focus on the deficit. It is a five to sixyear problem. The productivity issue looks more fundamental. I think the reason it is not being discussed is guy there are no solutions. Ross the flip side that is been strong unemployment growth. For your average voter, the fact that there is relative job security fairly high employment levels this productivity problem seems more abstract. Guy yeah. It strikes me as being maybe hard to communicate but one that is pivotal to the future. One area again that im sensing that the consensus may not be making enough of im curious about the magnitudor it, the data seems to be quite good. The p. M. I. Data earlier this week was incredibly strong. Ross the numbers are variable month to month. The p. M. I. s have been a little bit shaky. They have tended to overestimate the official data. It is a relatively jobs rich recovery, from a political perspective, that is the ideal backdrop going into an election. Real wage growth is where some of the discontent lies. None of the parties really had a radical or fundamental policy suggestion to restructure the u. K. Economy. There are vague numbers made about volkswagenal trading, for example. Moderate investment. No real Game Changing polts policies. Guy the markets seem relaxed about this. Particularly relaxed on perhaps there might be a new referendum. My sense in watching the markets over the years at the moment, it is the election. That seems fairly hard to call. Do you think the risk is post the election particularly if we were to see a tori administration there would be a need to put this in . Ross i think it is too far away at the moment for markets to begin to price in this risk but it is clearly the biggest question. Were the u. K. To leave the e. U. And will there be questions over the u. K. s access to the Single Market in terms of the magnitude of the economic shock that could result from that, it would dwarf the issue of nondoms. Guy thank you. That brings us to todays twitter question. Is ending the nondom rule a good idea . Tweet us and let us know your thoughts. Thursday well be debating one of the central issues to this election. We have just been discussing it. It is europe. We have a european debate taking place. The chairman of b. A. E. Systems. John mills and roland rudd will be joining us. Ill be moderating that session. We are looking forward to it here. Were going to have a live twitter board so you can join in the debate as well. Were going to take a break. Were back in a minute. Guy welcome back. Youre watching the pulse. The greek Prime Minister is in moscow today meeting Vladimir Putin. The timing of the meeting is crucial as greece is due to pay the i. M. F. 450 Million Euros. With the dangeror greece leaving the euro still very real the cozy relationship with russia is causing a little bit of concern in the west. David powell that is h report. Greece involved in the game of brippingsmanship. The players are Vladimir Putin, alex tsipras and the Group Formerly known as the troika. At stake is grease greeces future in the eurozone. Greece must pay about 460 Million Euros on april 9. Before tsipras will meet puten in moscow. The decision by tsipras to meet putin is a negotiating chip. There are a number of cards greece and russia can play to each others benefit. Russia can announce the listing of sanctions against greece to allow for imports of fruit and vegetables to resume. The sanctions for placed on the entire e. U. By russia in response to e. U. Sanctions placed on them. In return greece could bargain with the additional sanctions. Russia and greece could renegotiate their gas deal making natural gas cheaper for the greeks. One thing that is unlikely to happen is any kind of blackout from the russians. Their Financial Resources have been curtailed by the falling price of oil leaving their economy in a weak state. The danger is intimidation of the country warming up to the russians. In my opinion, greece and its european creditors will agree on a mutually acceptable list of reforms in exchange for enough money to keep the country afloat and the russians are likely to remain at a distance. Guy for our viewers, it is a second hour of the pulse. What have we got coming up for you . More on the megaenergy deal. Lets look at the reactions first of all. Shell, b. G. Trading in Different Directions this morning. B. G. Group up nearly 40 . This is the kind of area we were trading around a year ago. You have to think about it in those kind of terms. The Energy Sector has come off really quite aggressively since then. Just merely making that difference up. If you tried to buy this company a year ago, that is what put shell up. It has firmed a little bit. Brent trading at 58. 31 this morning, down by 1. 34 . Were going to take a break. You can follow me on twitter at guy johnson tv. Join the conversation. Ill see you in a moment. Guy shell snaps up b. G. Group. Forbid fruit. Tsipras meeting with putin today. They said they dont want Financial Support from russia. Ed miliband pledges to end the nondomicile rule for some People Living in the u. K. To avoid paying tax on some of their income. Good morning to our viewers in europe. Good evening to those in asia. Good morning to those just waking up in the United States. Im guy johnson. My colleague Francine Lacqua is not here today. Were going to begin with this megaenergy deal. Shell has agreed to buy b. P. Group. Making it the biggest deal in the oice and gas industry in a decade. Caroline hyde is at the touch screen. Caroline we are running the numbers. 47 billion pounds. What a price tag. A 50 premium on whether bg group had already been trading, the day before. Interesting, this is a record share price move the bg group up higher. Go back six months and that is when we last sow them trading at this price level. It lost so much of its value because of the plunge in oil prices. Suddenly the oil and gas stocks are looking attractive because of their reduction in price points. Shell is getting in on the action expanding, the Biggest Energy deal in a decade, forming the second Biggest Energy company in the world. Clearly this is about rejuvenating itself. Why is shell doing it . It is about reserves and building a new company so says the company. They say they want to build a Different Company with three pillars and focus on gas. It is about gas. It is about a cleaner type of energy. It is about diversing themselves. Diversity, discoveries in brazil mozambique and australia, these are the sort of assets they have. L. N. G. , which many are betting the emerging markets will turn to as a cleaner sense of fuel versus coal. In australia, they have some key assets that they want to get hold of the reserves. The way they can do that is buy queensland development. Synergies are going help 2. 5 billion, the savings they promised. What about the next wave . What about the rest of the Oil Companies . Why is the oil and gas sector having the biggest gains today since march 2009 . Because of this. Yes, this is the first really big deal we have seen done since we saw the falloff in oil prices. Last quarter, the First Quarter of 2015 was the weakest for m a in the sector. Now suddenly we have a catalyst. We have a spark. We have shell looking at being group. Bg group. Are these the sorts of companies that the major oil make rs, whether they will be analyzing looking at these sorts of smaller assets. Interesting times and Interesting Times for the chief executive of b. G. Group. He was the top paid executive in the whole of europe. He said im going help do this deal and then im out. With that, ill leave things to you. Guy what a nice transaction from his point of view. The way we would look at it now is if you look at the combination of the two companies, what we could do with the assets the fantastic assets that b. G. Has with our capabilities applied to them. We simply saw a lot more value in that combination than the market. Guy for more about the deal, lets bring in bloombergs managing editor. What does it do for shell . Caroline was talking about the big increase. That is the attractive asset they bring to the table. They have big discoveries in east africa. Shell has really been transitioning the gas over the last many years. They have clearly been looking at b. G. For a long time. It was always just too expensive but the Oil Price Decline made them more attractive. Guy how quickly do you think this deal was put together . Shell has always been looking at b. G. There has been that rumor. Yeah. Shell must have this big fat file in a drawer somewhere, what is the price for b. G. Group . You cant imagine going into the company if they were already negotiating the transaction. Why would he even do that . Guy what is shells track record on executes deals like this and making it work for shareholders . One of the big ones they did was enterprise oil. The u. K. Gas and oil company. That was an opportunistic deal. That paid off a lot more quickly. This is a lot more complicated. That was a established producer. B. G. Has tons of great assets but they will require a lot of money and time to bring them into development. Guy how will authorities around the world react if you look at where l. N. G. Cargo go. A lot of them going to asia. They snepped and got their concessions and got their pound of flesh in the form of a copper mine. China might try to do the same here. Guy sounds great. Everything sounds fine thus far. An opportunistic deal. They executed some deals before in the past. Why is the share price down . It is a good question. You know you really have to ask yourself what happens if the oil price does not recover or even goes lower . You have a big Capital Budget to continue feeding in a Lower Oil Price environment. Shell has always said they want to maintain or increase the dividend as well. There is going to be a lot of strains on the balance sheet. Guy why didnt they wait . You have an environment at the moment that is fairly volatile when it comes to the energy price. Do you think it was just it is there and they can make it happen. They have a new c. E. O. That maybe they can get an in with . Why dd they wait . The volatile environment at the moment would maybe cause some concern for investors. I suppose you would have to go in before they established too much of a presence. You would have to consider that as well. Look. Youre never really going to catch the bottom of the market, are you . It is a good question. If shell is looking at this as a 20year deal you know, whether they buy t at 50 oil or 45 oil, or 40 oil, it is a very different calculation, isnt it . Guy when you were talking about rio one of the things he was going to do was take out capacity. There is no way that Ben Van Beurden can manage the price of l. N. G. You wouldnt think so, no. There will be a big player in that market. The demand is going to continue to be there. The projections that rthat demand will continue to increase as china moves away interest coal. Japan stays away the nuclear power. There is going to be more demand. Guy the russians are becoming less of a reliable supplier. What is next . As with all of these things we have done this deal who else is now in firing line . This deal was executed fairly quickly by the looks of things. Are we going to see similar transactions being done . Big deals beget big deals. If you look at the history when Oil Prices Fell in 1998. B. P. Bought amico. Then three months later exxon bought mobile and total bout fina. Bought fina. Guy well wait and see what the next one is. Thank you. What else is on our radar this wednesday morning . As many as 40 of flights in and out of paris may be affected by the Traffic Controllers strike this morning. The strike could last 48 hours. The French Air Space is the busiest in europe. The booverpbing japan is maintaining its record stimulus policy at an annual pace of 80 trillion yen. Ed miliband is announcing today that the government would abolish the nondom sile rule. He will say that the scheme has been wide open to abuse and offends the moral base of taxation. The rule is unique to the u. K. That brings us to todays twitter question. Is ending the nondom rule a good idea . This started in nap olianic wars. Were taking a break. Well be back in a couple of minutes. Guy welcome back. Youre watching the pulse live from bloombergs european headquarters. Were in london. I want to show you a longterm chart for the stoxx 600. Why am i showing you this . We are back in record territory. The last time we were around this level was in 2006twen before the financial crisis which kind of ended the equity rally. However the last time we were where we are now was back in 2000 and that was the dot. Com boom which ended pretty badly as well. I just make the point that is where we are after 10 years. Up very nicely from the lows of the financial crises. If you had bought an index tracker at that point, you would probably have been quite happy. Lets talk about the opportunities moving forward from here. Well discuss the shellb. G. Deal. Good morning. Good morning, guy. Guy second of all, shall i keep buying equities . I think so. Earnings are still growing. In europe, earnings are growing. We are finally coming off the back of austerity in a number of economies, even countries like spain, portugal and italy, we are seeing some signs of growth and recovery. So areas like italian banks which quouled have run a mile from before are looking interesting today. Guy is it more to do with q. E. Than economic recovery . Maybe were not losing ground. Were not gaining a lot of ground. We have a massive buyer and portfolio effect by the e. C. B. At the end of the day, if youre looking for income or growth what are your options in interprets of investing in big assets . Cash is gone. I would argue property is the most difficult issue as well given the valuation levels across europe. If we compare equities and bonds would you get some german bond deals . Guy not much. What would you get from a spanish bond deal . Not that much more. That is the problem. Bonds are looking tricky and are yielding very little. I think quite a bit of downside only in particularly in inflation adjusted terms. Thats why i look to equities. They pay dividends. Earnings are growing because we have economic momentum. That is a fact. We have a weak currency helping as well. Guy which way is the wind blowing . You say it is up if that makes sense. How much further is this going to run . I hate making predictions, guy. I would say at least a double digit gain to be had between now the next 12 months in europe. I would be quite happy to be Holding European equities and in particular you could go by sectors, the Energy Sector. Small caps are lagged large caps but they are starting to catch up now. I think that catch up could continue. Guy lets talk about the Energy Sector. We seem to have had a starting gun being fired. Everybody expected there was going to be a race to maybe mop up assets that actually was cheaper to generate new reserves which these companies so desperately need via the stock market rather than going out and looking in the arctic. Why am i buying the Energy Sector . Is it because were going to see more m a . I think that is one reason, guy. There are several reasons. First reason is very simple. The oil price is going up. At the moment it is going up. If you look at the fundamentals, as you pointed out, cap exhas been cut. Future production is coming down. Big Oil Companies like shell are not about growing their reserves. That is nonsense. It is about managing a decline. Thats what they do. You take b. G. And shell together, are they going to grow reserves organically . Not really. They are going to manage the best assets and manage the dein oil and gas protectionproduction over time. Guy what is clear to me is i definitely do not want to be on the shell side of the fence. I want to be on the b. G. Side. How i do pick and choose . It is too late. The b. G. Share price has been a tale of woes since the beginning of 2014. As we know. They have just been rescued by shell shareholders effectively. Clearly the stock market is making the snap judgment that most of the benefits are going to b. P. And little if anything to shell shareholders. Me, i would go elsewhere in the Energy Sector. Guy that was the question i was asking. Where the next b. G. . Who is the next b. G. . Which Companies Look the most obviously positioned to be taken over . I would not to for the Biggest Companies necessarily. B. P. Could be taken over again. That could be vulnerable from a u. S. Buyer such as exxon mobil. I would look smaller scale. I think some of the smaller capping as you pointed out have cheaper reserves today if you look at the valuation. What they have on the ground or shareef shore. Those are more likely to be bought. Very chief in the price of re serves. That is what i look guy always a pleasure. Global Portfolio Manager at b. C. Asset management. Coming up in the next hour, that is the Bloomberg Politics show including a live speech by ed miliband. He is revealing fu proposals to a tax loophole that he is going to be shutting. Stay with us for that speech coming up here on bloomberg television. Guy welcome back. Youre watching the pulse. French air Traffic Controllers start a twoday strike. It will impact all airports in france as many as 40 of flights in the country. They are europes busiest air space. Do we understand how bad the strike is going to be at this stage in terms of its impact . So far guy we know that 1,600 flights flying to and from france will have to be canceled today. As you were mentioning the air Traffic Controllers union has warned about this strike. They said they will scrap at least 40 of their flights. Main mainly affected will be the short hauls. You will likely be affected. They are only flying about 30 of their flights for short destinations in europe. This will affect airlines like easyjet and ryanair. Easyjet is canceling more than 100 flights today. Ryanair 250 flights. However for long haul destinations you have a better chance of taking off today. Air france said they will try to guarantee most of their long haul flights today. Guy caroline, thank you very much. Lets move across the channel on a boat obviously not by plane. You could continue to that today. Ed mill band the Labour Party Leader wants to abolish the nondomicile rule. He will be talking about abolishing nondom status. He is going to make a manifesto pledge to get rid of nondom status. He is going to say there are 116,000 costing hundreds of millions of pounds to our country. It can no longer be justified. It makes britain an offshore tax haven for a few. It was created by william pitt the younger. Todays applications involve proving that you are domiciled overseas. That is not resident. That is not nanlt. It is a Spiritual Connection by proof of birth through your fathers line. Either you or your father or your grandfather was born overseas. That is really what it takes. Guy it can be quite vague cant it . Anna it can be quite vague. Tot quite as clear how you get nondom status. A lot of people could have it who dont by that definition. It is all about exemmings of foreign earnings. You would have to have a lot to make it worth wile. Guy you either close the loophole or dont close it. Annea the speech is about abolishing the nondom status. The shadow chancellor said it is not a good idea to cloudy skies close it entirely because it will cost the u. K. Money. The labor party is not talking about getting rid of an ability to avoid tax on earnings in the u. K. For four years, but what they are talking about is cutting back on the amount of time youre able to do that. It is actually only going to be maybe four years. They have not been clear on the time yet. A lot of details still to be established on. Guy we will take that speech live. Hopefully well find soth some details out there then. That brings us to todays twitter country. Is ending the nondom rule a good idea . Well be back in a couple of mince. We will see you then. Guy welcome back. Youre watching the pulse live from bloombergs european headquarters. Were in london. My colleague Francine Lacqua off today. Back soon. Shell has agreed to buy b. G. Group for 47 billion pouns in cash and shares. It is the oil and gas industrys biggest deal in at least a decade. The 47 billion price tag represents a premium of 50 of b. G. s closing share price. It will be larger than chevron. As many as 40 of flights in and out of paris airports could be affected by the air Traffic Controllers strike. French air space is the busiest in europe and the strike will affect Airlines Using the their air space as well as those flying through french airports. A vive endi representative denied they were acquiring sky. A sky spokesman declined to comment. Interesting morning for the market. Lets find out what is going on. Jonathan ferro over to you. Jonathan a Monster Energy deal. Im going to start with the record high in indices. Nothing really to jump up and down about. The dax down by. 25 . What is getting us over the line, we are up by. 5 on the ftse. It is the Energy Stocks on the stoxx 600 taking us high. The Monster Energy deal, i want to bring you some insight here now. A 47 billion pound deal from shell to purchase b. P. You see the stock go higher. It is a 50 premium. B. G. Up just a bit. I say just. It is a pretty punchy move higher. Royal dutch shell moves lower. The synergies, the Strategic Value of this deal makes sense. To the financials. Some concern on that. Shell a little bit lower through the morning. That is big move. Of course the bigger move is the last three months. Qu 1, the biggest quarter since 2009. That energy deal took us over the line. Im looking straight at the dollar. The dollar index. A little bit of dollar weakness. The big event comes later on this evening. The fomc minutes. We take you back to march when janet yellen gave it one hell of a slap. Back to you, guy. Guy jon, thanks very much indeed. Jonathan ferro on the markets. Plenty of coverage coming up on the minutes later on today. The greek Prime Minister tsipras is heading to moscow to meet with president putin. Lets bring in hans nichols from berlin. Somehow Angela Merkel . Lou the germans viewing this . How are the germans viewing this . Hans we did hear from a german Government Official saying look, if russia decides to lift some of the sanction against greece so that they can export some fruits and vegetables to russia no one in germany would really mind. Ahead of this visit, we had an official out of greece saying they would not be asking for Financial Assistance. That wasnt on the official agenda. What is on the agenda, perhaps lifting those agricultural restrictions, maybe something on natural gas and maybe something on that pipeline going through that would go through turkey and eventually through greece. Those are the topics that we think are on the agenda. It looks like athens is making a point, at least this morning, of saying that they will not be asking for Financial Assistance and they are gong to work through their problems with their creditors and within the framework over the European Union. Guy . Guy how much are people talking about it . You and i are getting excited about it msm more widely, are people reading anything into it . Hans absolutely. It is very much part of conversation a tabloid publication had a nice anecdote. It is not oversurprising but they took a look at the hotel that mr. Tsipras was staying at this moscow. 270 euros a night. Thats what it cost there just to give you a flavor of the general german press view of the jet setting by mr. Tsipras, what it is costing the greek state which they fear the german taxpayers are ultimately going to be on the hook for. Guy . Guy thank you very much indeed. Interesting stuff. Hans nichols from beuerlein. Lets go to moscow. Tony joins us for the russian angle on this. What do the russians potentially want out of this meeting . Tony russian president putin is very keen to increase pressure within the European Union to remove the sanctions that have been imposed against russia over the conflict in ukraine. Those sanctions required unanimous approval by a member state. Even one state deciding it is not worth renewing the sanctions when they come up for renewal in june or july would be a great asset for mr. Putin. I think he views greece as the Pressure Point within the e. U. , the weakest link that he can begin to exercise pressure on so that he can achieve his goal. Guy basically from a greek point of view, this is about shoring up support within the party that he is basically coming for a little bit of a kind of post communist halo effect that maybe Vladimir Putin can generate from moscow. Is that true as well do you any . Tony well, there are a great deal of cultural affinities between greece and russia. They share the orthodox fate. They also both celebrate easter this weekend. I think if they are looking for some sympathy based on past communist of mr. Putin then they will be disappointed. Russia is ruthlessly pragmatic. It views greece as a potential card to play against this particular germanys Angela Merkel to try and increase the pressure for the sanctions to be lifted. Anything else has to be viewed through that lens. Guy tony, thanks very much indeed. Lets get some more analysis on this tsiprasputin meeting. Were joined by the head of fx strategy. Good morning. Good morning. Guy are we reading way too much into this meeting in moscow . We are suggesting in any way there is going to be any Financial Aid emanating from moscow back to greece . Most of the greek government and the russian government were not going to see any official funding coming from russia. It has been said that they will discuss corporation and Energy Policy and perhaps some restriction for greek exports or products. But it does raise some questions given the funding pressures in greece. Given the slow progress in the negotiations. Is this really a priority for greece at this point . Guy what kind of message does it send as well . If you negotiating with somebody and they Start Talking to a third party that you have a big issue with, that is going to send a different line of communication than the one you were hoping to receive. Up to an extent, yes. We were wondering about the strategy of the greek government. One can say that the Prime Minister is trying to bring home some good news if he succeeds. What he really needs to bring back to greece is a deal with europe. Guy what i think is the interesting angle on this story is that this trip is nothing to do with financing. Nothing even to do with selling more fruit. It is about shoring up his own party. This is a story that i increasingly am hearing out of athens. That he is struggling with the left fringes of the party. That is making it difficult. How much is it problematic for greece and the eurozone . That might be the case. At some point, the Prime Minister will need to bring to the parliament a new program with many unpopular measures that go against the election promises. About 1 3 of the party they are more left than the other party, the left plafrpbl and there is a risk they might not support this deal. This is something that has to be done. There is no way that greece will get new money without an official program. We expect this Political Development sometime in may or june the very latest. Guy the current government, as it is constructed, do you think that the politics and economics can in any way combine . Progress has been slow but they are converging gradually. We believe by early may at the latest they will understand how the program will look like. The most difficult thing is to approve this program in the parliament and how the fund it in the meantime because they are running out of cash. Guy how will the market react to the elections in greece . That will be very negative for the markets. We might see a referendum on the deal when we have it. Guy so it could back to the question of the constructions. If he cant get his Party Onboard or get the votes through parliament, do we need another political construct or another election or unity government or some possible referendum . The status quo doesnt look like it is going to fit together particularly well with the kind of Economic Reforms the rest of the eurozone want to enact. It is likely we will see a new Government Coalition of friendly parties against everybody else to go through this process, things might have to get worse. Things might need to get worse before getting better. Guy lets talk about how they might get worse. What does it look like in your mind . We have this i. M. F. Payment that is due tomorrow and then a series of payments to private holders and also to the e. C. B. It is getting shorter. There is no time. The government so far has survived in last month by using from various state entities. This is how they are going to pay the i. M. F. This week. However they need another 2. 5 billion for the next month to repay the i. M. F. They need to pay by the overped in month. The government is running out of cash. Tame, the banks continue losing deposits. They need a positive signal of a deal soon to stop all of this. Guy one final quick question before i let you go. Would you be long or short into the dollar for the fed minutes tonight . I think the downside at this point. It will be dovish. This was the meeting that led to the dollar correction. We will be looking for opportunities to buy the dollar. Would remain bullish in the longterm. Guy nice to see you. Coming up, were going the hear more from our interview with the shell c. E. O. Ben van beurden on his 47 billion pound megadeal with b. G. Dont go away. More of that coming up after this. Guy welcome back. Youre watching the pulse live from london on bloomberg television. Lets get back to our top story of the day. Shell has aagreed to acquire b. P. Group for 47 billion pounds. What is the logic for this deal from the shell side over the fence . Jon ferro spoke with the companys c. E. O. , Ben Van Beurden, earlier this morning. I think we have been looking at b. G. For a long period of time on and off. It was a match that really worked well in our minds. Two companies coming together. If you look at what integrated gas everyone g, if we could combine the two, add to that the capabilities, this was always going to be a fantastic combination. What happened over the last month is a macro environment involved to a point that not only was there great logic but it became a very compelling value. To together with the value that we see in combining, the value that we see in the synergies, this became something that looked too good to pass up on and thats why we moved as we did in this period. Jonathan just to follow up on that, you said the macro environment the collapse of the oil price helped drive this deal . Well of course, the collapse in the oil price has done quite a bit for the sector. Of course it tends to happen when the oil price comes down and there is a different valuation. The way we would look it a, though if you look at the combin of the two companies, combination of the two companies, what we could do with the assets that b. G. Has, we would have a lot more value if that combination than the markets, the marketplace. Guy investors have a lot of questions they want answered by mr. Ben van beurden. Trying to figure out why the stock is down. You have an a and a b stock here as well. The the difference in the two relates to the way the dividend is structured and you currently have the a share and the b Share Trading a little bit different. That relates to the structure. B. G. Group up 36 . Trading at 1,247 pence. Nearly 40 . 37 lets call it. The big story of the morning. Lets talk you through some of the other stories we have been watching as well. The u. S. Top Homeland Security commander warned that north korea has deployed a new bullistic missile and is capable of launching a warhead upon it. He added if it were fired at the United States there is a high degree of confidence that u. S. Forces could knock it down. The japanese owner of the hello kitty character says the data of 6,000 shareholders may have been leaked. Shares fell over 4 before recovering in tokyo trading. And ed miliband is announcing today the Labour Government would abolish nondomicile rules. He said the scheme has been wide open for abuse. 110,000 people use the nondom rule which is unique to the u. K. Now coming up, the greek Prime Minister tsipras is meeting with president putin today. Well take a look at why these talks are a little like a high stakes game of poker. Who that is best cards . Who is bluffing . Well have that story when we come back. Guy welcome back. The greek Prime Minister alex tsipras is in moscow today meeting with Vladimir Putin. With the danger of greece still leaving the euro very real this relationship with russia causing a little bit of concern with the west. Lets find out how this is going to play out. Who has the cards . Who doesnt . Greece involved in a game of brinkmansship. The players are Vladimir Putin, alex tsipras and the troika. At stake is greeces future in the eurozone. Greece must pay the i. M. F. About 460 Million Euros on april 9. Then tsipras will meet puten in moscow. The decision to meet putin was a negotiating chip designed to suggest to the west that the greek government has options if they are beapeded by the yearpian partners. There are a number of cards they can play to each others benefit. Russia can announce the listing of sanctions against greece to allow imports of fruits and vegetables to revacuum. The sanctions were placed in response to sanctions being placed on russia. In return, greece could any additional sanctions being applied by the e. U. They could renegotiate their gas deal making gas cheaper for the greeks. One thing that is unlikely to happen is any kind of blackout from the russians. Their Financial Resources have been curtailed by the fall in the price of oil leaving their economy in a weak state. The danger that greeces euro Area Partners are intimidated by them warming up to russians. In my opinion, greece and its european creditors will agree on a mutually acceptable list o reforms in exchange for enough money to keep the country afloat the russians are likely to remain at a distance. Guy how good is your poker face . Jon ferro is here with what were looking at the rest of the day. Putin gets to talk to somebody from europe and show that he still has an influence and what that influence is and tsipras is going there trying to keep his party together. Jonathan any sense is eurozone creditors couldnt care less. They find this trip ridiculous and the other is the claim for war reparations which im sure the germans find insulting and ridiculous. A spokesman saying the case is closed. At the end of the day, this government is running out of money. There is a payment to the i. M. F. Tomorrow about 450 million youros. There are a couple of rollovers of treasury bills in the next couple of weeks as well. People are concerned they may not be up to do these kind of things. What is he doing going russia . Some think it is fine. Others think it is ridiculous at completely the wrong time. Guy we could debate this more. Lets talk about the fed minutes from the meeting that sent the dollar lower. Jonathan march 18. Yellen gives a brutal slap to the dollar after an epic rally. A little dollar weakness will get the conversations that took place at that fed meeting, how much they care about the dollar. For a while everybody said they didnt. Now it sounds like they kind of do. Well get more detail on that later. Guy your old university. Jonathan my old school. Guy this is a lot of politics. Not a lot of economics. Jonathan whatever he has to say, i dont think it affects me personally. The politics show up next. Well be taking that speech from Warwick University with mr. Miliband live if that program. Well see you in a couple of minutes. 70 billion. The biggest deal in the Energy Industry for at least a decade. Playing poker with putin. Frequent flyer freak out. Which airport makes travelers lose their cool the most . Good morning. This is bloomberg surveillance. We are live from new york city. Im Olivia Sterns with brendan greeley. Tom keene is actually off today. Brendan he took a vacation. I am impressed. Olivia lets get to the job headlines. Brendan it is the biggest deal in the oil and gas industry in a decade. It represents a premium of 50 on bgs closing price. The way we would look at it is that if you look at the combination of the two companies, what we could do with the assets that bg