Shell Studies Acquisition of BP, Reports Say
[Stay on top of transportation news: .]
BP Plc rose on May 5 after Bloomberg reported that Shell Plc is working with advisers to evaluate a potential acquisition of its U.K. rival.
BP’s American depositary receipts climbed 1.9% to $28.64 at 9:33 a.m. in New York. The London Stock Exchange is closed May 5 due to a bank holiday. Other major U.S.-listed oil producers fell, tracking lower crude prices.
Shell has discussed the feasibility and merits of a takeover with its advisers in recent weeks, although it’s waiting for further stock and oil price declines before deciding whether to pursue a bid, people familiar with the matter told Bloomberg, asking not be identified because the information is private.
ܳԳDz
A successful combination of Shell and BP would be one of the oil industry’s largest-ever takeovers, bringing together the iconic British majors in a deal that has been discussed on and off for decades. The companies were once close rivals — with a similar size, reach and global clout — but their paths have diverged in recent years.
Shares of BP have lost almost a third of their value in the last 12 months as a turnaround plan has fallen flat with investors and oil prices tumbled.
BP has been battling prolonged underperformance stemming in large part from a net-zero strategy embraced by former CEO Bernard Looney. His successor, Murray Auchincloss, announced a reset in February that included a pivot back to oil, cuts to quarterly share buybacks and promises to sell assets.
Want more news? Listen to today's daily briefing above or go here for more info
Investors are growing impatient. Activist firm Elliott Investment Management has gone public with a 5% holding in BP and is calling on the company to consider more transformative measures.
Deliberations are in the early stages and Shell may opt to focus on share buybacks and bolt-on acquisitions rather than a megamerger, the people said. Other large energy companies have also been analyzing whether they would want to bid for BP, they said.
“As we have said many times before, we are sharply focused on capturing the value in Shell through continuing to focus on performance, discipline and simplification,” a spokesperson for Shell said in an emailed statement. A representative for BP declined to comment.
Written by Dinesh Nair, Vinicy Chan, William Mathis and Mitchell Ferman
