Shell has made a cash and shares offer worth GBP47bn ($69.8bn) to purchase BG Group at a 50% premium on its share price, an offer the BG board has recommended to its shareholders.

For each share in BG Group Shell will pay $5.72 and 0.4454 Shell B shares, which will leave BG Group shareholders owning 19% of the combined company.

“Bold, strategic moves shape our industry. BG and Shell are a great fit. This transaction fits with our strategy and our read on the industry landscape around us," commented Ben van Beurden, Shell ceo.

"BG will accelerate Shell’s financial growth strategy, particularly in deep water and liquefied natural gas (LNG): two of Shell's growth priorities and areas where the company is already one of the industry leaders. Furthermore, the addition of BG's competitive natural gas positions makes strategic sense, ahead of the long-term growth in demand we see for this cleaner-burning fuel."

From 2017 Shell expects launch a $25bn share buyback programme, subject to debt reduction and a long term oil price of $70-$110 per barrel. In calculating cash flows for the acquisiton, Shell used a $90 per barrel price for Brent crude. Brent crude closed at $59 per barrel on Tuesday.

It is expected that BG Group ceo Helge Lund will leave the company after the acquisition, after taking up the post in October 2014.

"The consolidated business will be strongly placed to develop the growth projects in BG’s portfolio. The transaction will take time to complete, during which my team and I will remain committed to BG and our shareholders, and to safely delivering our 2015 business plan,” Lund commented.