Shell pauses $3 billion share buyback ahead of ARC acquisition vote

By Stephanie Kelly

LONDON, June 12 (Reuters) - Shell said on Friday it was pausing its $3 billion share buyback programme through July 14, citing securities law requirements linked to its pending $16.4 billion acquisition of ARC Resources and the Canadian company’s upcoming shareholder vote.

Shell said any shares not repurchased during the suspension will be rolled into the remainder of the company's 2026 buyback programmes, subject to board approval.

Shell cut its quarterly share buyback programme in May to $3 billion from $3.5 billion to preserve cash for its balance sheet as a short-term ​liquidity squeeze after war-related energy supply disruptions increased its debt.

In April, Shell announced it would buy ARC in a deal paid for mostly with shares. The British major said in the announcement it will pay ARC shareholders C$8.20 in cash and 0.40247 Shell shares for each share, or around 25% cash and 75% shares at a 20% premium to ARC's average share price over the last 30 days.

The parties entered into an agreement on June 6 to address technical aspects of how the C$32.80 per ARC share will be issued and delivered to ARC shareholders, ARC said on Friday.

ARC will hold a shareholder meeting on July 14. The deal needs at least 66% support to be approved. 

The acquisition is Shell's biggest since it bought gas giant BG in 2016. The deal was announced after analysts and the company had forecast Shell needed an acquisition or exploration breakthrough because of its ageing fields.

ARC's production lies near Shell's existing Canadian fields which feed into the LNG Canada plant, in which Shell holds a 40% share and whose liquefied natural gas can reach Asian buyers more quickly than most other North American LNG.

ARC's output is around 60% natural gas and 40% oil liquids.

(Reporting by Stephanie Kelly in London and Raechel Thankam Job in Bengaluru; Editing by Shailesh Kuber and Louise Heavens)