Q: I will not be holding Shell after this. Short on Industrial and Financial names. Any suggestions on good replacement. This is a good time to reduce my energy exposure as it is too high.
5i Research Answer:
The deal is at about a 20% premium, and consists of 75% stock and 25% shares. It is the largest deal for Shell in 10 years, and fairly sizeable. We highly doubt there will be another party willing to get into a fight with Shell, so we would expect this deal to proceed. It is not a great premium, but OK. Still, we would keep shares for now. For the other sectors mentioned, we would look to SLF, WSP, STN, IFC. WCP could be a replacement within energy.