General – Bid
As reported by Bloomberg, Shell is seriously exploring how feasible and beneficial a takeover of BP would be.
Shell is reportedly engaging with advisers to plan out what a deal would look like.
It comes amid turmoil at BP over its approach to green energy. The company vowed to slash its oil and gas production and invest heavily in renewables in 2020, making the boldest commitment to net zero in the fossil fuel industry.
However, the strategy failed to deliver financial returns, and BP has recently abandoned the plans in favour of a return to focusing on oil and gas. It follows intense pressure on management from US hedge fund Elliott Management, which has become one of BP’s biggest shareholders after building a 5% stake.
The BP mess has left its stock price languishing. Shares have slumped 30% over the last 12 months and are just 11% above where they were when BP launched its green energy strategy.
By contrast, Shell’s stock has rallied almost 90% over the last five years as it has focused on oil and gas. The divergence has left BP worth just £55 billion, compared to Shell’s £148 billion.
A combination of Shell and BP has long been speculated, but a deal would be likely to face intense political scrutiny and attract the attention of competition regulators.
Shell is understood to be biding its time and awaiting further drops in BP’s shares and oil prices before deciding whether to bid.
Wael Sawan, Shell’s chief executive, told analysts last Friday that the oil giant “of course … will keep looking at inorganic opportunities” for growth but said “the bar is high” for deals.
