At US$16.4bn Shell's (LSE:SHEL) latest acquisiton, picking up ARC Resources to 'plugs a medium-term production gap' makes some rational sense, even if it might on the pricier side, that's the view amongst analysts at HSBC.
The bank's team repeated a 'Hold' rating and a price target of GBPp3,350 by HSBC after the company om Monday revealed it had agreed to acquire ARC Resources.
HSBC analyst Kim Fustier noted the Western Canada acquisition adds roughly 370 kboed of Montney liquids and gas and about 2bn boe of 2P reserves while strengthening LNG Canada optionality.
Fustier also highlights that the CAD32.80 per-share consideration is a c20% premium to ARC's 30‑day VWAP, and that the deal is funded roughly 25% cash (about USD3.4bn) (and 75% Shell shares (about USD10.2bn and c228m shares).
The analyst also noted that Shell guided for US$250m of annualised synergies within a year and HSBC judged the deal value as "fair to slightly expensive" (based on an implied long‑run Brent in the mid‑USD70s/bbl).
Shell expects to closr the transaction is expected to close in the second half of 2026, subject to ARC shareholder, court and regulatory approvals.
