Shell's agreed bid for BG has a nice, conventional feel about it - in the context of the oil-price cycle. We know how to assess this one.
The various bits that spun out of the old British Gas at demerger in the mid 1990's - BG, Centrica and Transco - all performed much, much better individually, a great endorsement of the split-up strategy. And they all stayed British ! - which pleases several hardcore C@W commenters. Centrica remains independent, and Transco went to National Grid. The big 'Rough' gas storage facility was sold by Transco at an early stage to Dynegy of the US, but bought back in by Centrica a while later. Does Shell count as sufficiently British to satisfy this atavistic concern ? Personally I care rather little.
BG was always an interesting company, with assets all over the place. Trinidad LNG production was once the jewel in its crown, plus a bunch of North Sea gas assets it was not permitted to manage proactively while still part of Old-Monopoly-BG, so it let Amoco (of Chicago) operate them. More recently it has done good pioneering work in Brazil. It has long been a target, periodically: and the logical acquirer is a company that really knows how to manage (and value) this lot.
Shell's move is an attempt to emulate BP circa 1998 and call the bottom of the market. BP, it will be recalled, triumphantly called that particular bottom at $10 and bought Amoco, Arco and BurmahCastrol before anyone else had settled into the starting-blocks. I have a feeling Shell have moved just a tad too soon, but they may not much care. This type of deal is 'business as usual', a bigger version of all the little shale-company acquisitions that will happen when their hedges expire and the banks press for debt to be serviced. Creative destruction - the reason it's hard to suppress capitalism.
[By the way, Shell missed out altogether in 1998-99 mega-takeover binge. I can reveal that they seriously considered buying Enron! - but they couldn't understand the books. In 1998 those books were still just about comprehensible to those who grasped mark-to-market accounting (not Shell, that's for sure). Of course, three years later they made no sense to anyone ...]
Centrica is even more interesting. Gazprom is perenially rumoured to be eyeing it for acquisition, but as I have often written here, that's always been bullshit: they never pay cash for anything (and they have even less of that now than usual). Of course, Centrica is a midstream+retail business, so depressed hydrocarbon prices don't automatically make it a target. It's twice peaked at around 400p, in 2007 and again in 2013, but has been on the slide for 18 months now.
Its portfolio weighting is still UK-heavy, with all manner of daft and complex 'obligations' and regulatory constraints as one of the 'Big 6' retailers and a major player in UK power. Who can see their way through that minefield? You can never rule out some middle-eastern SWF or far eastern utility with more money than sense. It has often been said that HMG would block a Russian bid - an empty observation, see above - but what would they say to Qatar or Malaysia? I really don't know.
I'd say - if they are offering the usual 180 cents on the dollar, why ever not? - and I hope my pension fund agrees.