Shell denies it is in takeover talks with BP after WSJ report
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The news: Shell has denied it is in talks to acquire BP, following a Wall Street Journal report that the two UK oil giants were in early-stage discussions.
“This is further speculation. No talks are taking place,” a Shell spokesperson told financial media.
The numbers: The report triggered a surge of almost 10% in BP’s New York-listed shares before they settled around 1.66% higher. Shell shares had fallen over 4% on the report but were trading around -0.71% in the afternoon.
What they said: According to the reports, the Shell spokesperson reiterated the company is “sharply focused on capturing the value in Shell through continuing to focus on performance, discipline and simplification.”
CEO Wael Sawan has recently said he would rather buy back Shell’s own shares than pursue a major acquisition.
The context: The speculation about a possible Shell-BP merger comes amid sustained scrutiny of BP’s strategy and performance. BP has lagged behind Shell and other major oil companies after a troubled shift toward renewables, management upheaval and operational issues.
Activist investor Elliott Investment Management, which holds over 5% of BP’s shares, has pushed for changes since at least February. In response, BP unveiled a strategy reset to increase oil and gas production and reduce clean energy investment, but the plan was met with some scepticism by investors.
Acquiring BP would bolster Shell’s ability to compete with ExxonMobil and Chevron, particularly by expanding its global trading reach and strengthening operations in regions like the Gulf of Mexico, the Journal noted. But a merger would likely be costly, complex to integrate and face high antitrust regulatory hurdles.
The sources: The Wall Street Journal, Bloomberg
