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 gettin