'Blood in the water': But Shell denies BP takeover talks
Oil supermajor denies Wall Street Journal report of possible acquisition of London-based rival that would create a potential offshore wind powerhouse
Shell has doubled down on denials that it is in talks over a spectacular takeover of fellow oil and gas giant BP, which would create an offshore wind superpower despite the two supermajors both backpedalling fast from renewable energy.
Shell issued a statement this morning that, in response to media speculation, it “wishes to clarify that it has not been actively considering making an offer for BP.”
It further said that it “has not made an approach to, and no talks have taken place with, BP with regards to a possible offer.”
The company explained this is a statement to which Rule 2.8 of the Code covering takeovers of UK companies applies and accordingly Shell confirms it has no intention of making an offer for BP. As a result, Shell will be bound by the restrictions set out in Rule 2.8 of the Code that will now see it barred from a takeover bid for six months.
BP for several years has been the subject of takeover speculation due to the relative underperformance of its shares.
Tony Beebe, an independent energy sector M&A advisor, posted on LinkedIn that BP is vulnerable after years of “shifting strategy, green pivots, and activist pressure from Elliott Management have left BP underperforming and unloved.
“They’re trimming renewables, offloading Castrol, and losing key leadership. That’s blood in the water.”
Shell meanwhile is on the “offense,” he said. CEO Wael Sawan has doubled down on performance and profitability – upping fossil production, scaling back green targets, and buying back stock.
“A BP acquisition could supercharge LNG, Gulf of Mexico ops, and trading scale.”
As well as being a blockbuster deal for the fossil fuel sector, any Shell-BP merger would unite two energy giants whose recent fortunes have been bound up with shifts towards – and then away from – renewables and a net zero strategy.
Shell and BP under former CEOs Ben van Beurden and Bernard Looney respectively launched concerted pushes into the power sector, with a focus on areas such as offshore wind and solar, and set stretching decarbonisation targets for their businesses.
The world shifted on its axis after Russia’s invasion of Ukraine in 2022 when oil prices surged and investors began questioning the wisdom of pursuing the lower returns available from renewable energy projects.
Van Beurden’s successor Sawan, in 2023 signalled a hard and early pivot back to oil and gas that saw a wholesale exit from sectors such as floating wind power, where the fossil group had just a few years earlier promised to be a global leader.
While investors and the share price responded favourably to Shell’s retreat from green, they have been less convinced by BP’s. Shell’s market capitalisation is currently around $208bn compared to BP’s $77bn.
Despite their dash back to oil and gas, both BP and Shell still contain significant renewable energy operations, such as BP’s Lightsource solar unit and interests in the JERA BP joint venture, and Shell's offshore wind operations in the Dutch North Sea.
Shell reports having some 1.7GW of global wind capacity in operation, mostly offshore, while BP claims 9.5GW of offshore wind either in development or operation.