Shell is actively exploring a potential takeover of BP, assessing its feasibility and benefits with the help of advisers. The move follows BP’s troubled shift toward green energy, which failed to deliver strong returns. BP has since reversed course to refocus on oil and gas, under pressure from major shareholder Elliott Management.
BP’s stock has dropped 30% in the past year, reflecting the fallout from its failed green energy pivot, while Shell’s shares have risen nearly 90% over five years due to its focus on oil and gas. This has widened the valuation gap, with BP now worth £55 billion compared to Shell’s £148 billion. While a Shell-BP merger has long been speculated, any deal would likely face political and regulatory hurdles. Shell is reportedly waiting for BP’s share price and oil prices to fall further before making a move. Shell’s CEO emphasized a high threshold for acquisitions, stressing a focus on performance and discipline.
Shell CEO Wael Sawan said buying back the company’s own shares currently offers the best value, stressing the need to “have our own house in order” before pursuing major takeovers. However, acquiring BP could boost Shell’s U.S. presence—thanks to BP’s Gulf of Mexico assets—and help it compete with larger U.S. rivals like Exxon Mobil. The takeover speculation increases pressure on BP’s leadership, as recent strategic shifts have failed to lift its share price or appease key investors like Elliott Management.Despite scaling back its green plans as Elliott urged, BP now faces more pressure from the hedge fund to cut UK jobs and boost investor returns. The company has already announced 4,700 job cuts and 3,000 contractor reductions worldwide.
