Uncertainty about corporate strategic direction in the face of plunging oil prices, fears around climate change and geopolitical turmoil are playing out on the theatrical stage of M&A for investors. Their voices are getting louder on both sides of the argument as to whether Royal Dutch Shell’s (NYSE:RDS.A) £36bn ($52.3 billion) bid for BG Group (LON:BG) , first mooted last April, makes financial sense.

The Financial Times reported last Thursday that the deal was poised to win the support of “most of the Anglo-Dutch oil giant’s shareholders” paving the way for its completion, despite the collapse in the price of crude. At the same time its report also said “Several large Shell investors have privately voiced concerns over the economics of the proposed takeover, the biggest energy deal in more than a decade”. 

Supporters of the takeover are acting on the expectation that once the deal – which has already cleared all regulatory hurdles – has the vote of approval of a majority of Shell shareholders and 75 percent of BG shareholders, it will give the merged company a dominant position in Liquefied Natural Gas (LNG) and deep-water oil.

But those in support of the deal are likely also to be assuming the energy giant’s ability to deliver returns at future long-term oil prices that remain around $60 and above (see NASDAQ End of day Commodity Futures Price Quotes for Crude Oil WTI (NYMEX)).

On Friday last week, Institutional Shareholder Services (ISS), the proxy advisory group, published a report in which it recommended that investors vote in favor of the deal.

“Investors may understandably be discomforted by the significant volatility in global spot prices for oil,” it said. But it added that it is worth recognizing “that the spot price today may be of very little value in assessing the strategic opportunity of a transaction whose benefits will be realized over decades.”

“In particular because of the compelling strategic rationale, and the significant positive economics to be realized within a relatively short timeframe, support for the transaction is warranted,” said ISS. Its recommendation is seen as extremely influential because of media reports suggesting that 35 of Shell's top 50 shareholders subscribe to its services. 

Since the ISS report however, Standard Life (SLI), one of the U.K.’s largest investment funds which holds 0.4 percent of the A shares in Shell and 1.7 percent of the B shares, has said it will vote against the deal. “We have concluded that the proposed terms of the acquisition of BG are value destructive for Shell shareholders. This view is based on the downside risks to Shell’s oil price assumptions plus the tax and operational risks surrounding BG’s Brazilian asset base. Consequently, we shall vote against the deal” said a late statement on Friday from David Cumming, head of equities at SLI.

It also said it had held meetings with Shell to explain its views and try to get the chief executive, Ben van Beurden, to renegotiate better terms. Standard Life Investments is coincidentally also one of the more vocal investment houses on the need for responsible investment (as covered by me here on Forbes) and its statement refers to a variety of risks.

Shareholders in Shell and BG are set to vote on Jan. 27 and 28. Those watching the difference between BG’s current share price and the value of Shell’s offer might be forgiven for wondering at this stage what will happen.  In theory, that gap should close as the deal gets closer to being done. But on Friday, BG’s shares were trading at around 946 pence (US$13.65), about 6 percent below the value of Shell’s cash-and-share offer.

The Wall Street Journal termed that so-called arbitrage spread “unusually wide”, calling attention to the fact that the hedge funds will be watching. “Many big hedge funds have wagered that the deal will go through and stand to either pocket a healthy profit if they’re right or lose big if the deal unravels” it said.

Pentwater Capital Management last week disclosed it owned more than 50 million BG shares, worth nearly $750 million; Davidson Kempner European Partners has disclosed about $880 million worth of BG shares; and TCI Fund Management has revealed a position worth around $500 million, according to the Wall Street Journal.

In other words, there is a great deal of money washing around the edges of this deal. If this consolidation is successful and other companies follow suit, this could signal the beginning of a recovery for Big Oil.

Dina Medland is an independent writer, editor and commentator with a strong focus on issues around corporate governance, ethics, the workings of the boardroom and sustainable business. She is on the team of contributors to @ForbesEurope and is an ex-Financial Times staff member who has been a regular contributor in recent years. Further details about her background and a portfolio of work – including her commercially sponsored blog ‘Board Talk’ are available on her website http://www.dinamedland.com