BP shares experienced significant volatility following a report in The Wall Street Journal that Shell was in early-stage talks to acquire the British oil major. The report, citing individuals familiar with the matter, caused BP’s shares to jump more than 10%, reaching a session high of $32.94. However, Shell has since denied that any such discussions are taking place, calling it ‘further market speculation.’ BP is a British oil and gas company focused on finding, producing, and transporting oil and gas around the world. Shell is a global energy company involved in the exploration, production, refining, and marketing of oil and natural gas, and the manufacturing and marketing of chemicals.
According to the initial report, a potential acquisition of BP by Shell would be the largest deal in the industry since the 1990s. BP currently has a market capitalisation of approximately $80 billion. After Shell’s denial, BP shares retreated, with the stock last trading up about 2%. A Shell spokesperson told CNBC that the company remains sharply focused on capturing value through performance, discipline, and simplification.
Sources familiar with the matter suggest that a full acquisition of BP by Shell is unlikely. Instead, a potential scenario involves BP being split and sold in pieces to multiple companies. BP’s recent underperformance compared to Shell and U.S. rivals has fuelled speculation about the company becoming an acquisition target.
BP had previously set ambitious targets to reduce carbon emissions and invest in renewable energy. However, a strategic reset earlier this year saw the company refocus on oil and gas while reducing spending on renewables. Activist investor Elliott Management disclosed a stake of over 5% in BP in April, adding to the pressure on the company to concentrate on its core fossil fuel business.
