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Shell Plc continues acceleration towards net zero…

Shell Plc (LON:SHEL), the London-listed global oil and gas company, completed the acquisition of Nature Energy, the Denmark-based operator and leader in the green transition and biogas space. The consideration for the deal was $2bn, in a move that sees Shell continuing the pivot towards meeting climate targets…

Developments in climate awareness and clarity on goals in recent years have kickstarted a shift in the energy space, which has caused traditional oil and gas firms such as BP and Shell to pivot their business, with a view to reaching net zero. This has seen a spur in M&A activity within the green transition space as larger corporations look to integrate these desirable assets into their operations. The acquisition of Nature Energy allows Shell to build their integrated RNG chain at a global scale, whilst profitably growing low-carbon offerings to customers.

Nature Energy owns and operates 13 biogas plants across Denmark, and 1 plant in the Netherlands, with more projects in the pipeline. They treat more than 4.4 million tonnes of biomass a year, which is utilised across a range of solutions, including the transport industry.

JP Morgan Asset Management advised Davidson Kempner, Pioneer Point Partners, and Sampension on the exit, with Greenbrook Communications offering communication advisory for Nature and DLA Piper on the legal advisory for Shell.

In terms of share price activity around the deal, movement has been minimal. On the day of deal completion, Shell's share price closed at £25.24, with the following three days sitting in the high £24s, closing at £24.82 on 23rd February, a -1.66% movement.

Shell has been highly active in the M&A space around green energy, taking on assets across the board, including BESS, solar, and other assets along the vertical stream. This strategy is allowing for a vertically integrated offering of renewable, cleaner energy, from exploration and production, to end-user interactive products to learn more about offsetting carbon footprints. With a target set of being a net-zero emissions energy business by 2050, alongside an interim goal of reducing absolute emissions by 50% by 2030 (compared to 2016 levels) this deal lands in the sweet spot of Shell's strategic outlook.

On the back of a hugely profitable year, financials have allowed Shell to springboard acquisition strategy and really drive its pivot. Continuation of this provides a good outlook for the company and the sector, as players will look to follow suit strategically.

Written by: Jack Clemmey

Sources: Pitchbook, Nature Energy, Shell

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