British oil group BP, which has lagged rivals in recent years, saw a boost to its share price today on rumours of a possible mega takeover by rival Shell.
A merger of the British companies would create a giant valued at more than £200 billion at the pair’s current share prices and deliver one of the oil and gas sector’s largest acquisitions.
Contacted by AFP, a BP spokesperson said that the company does not comment on “speculation and market rumour”.
Shell referred back to comments on Friday made by its chief executive Wael Sawan, who following an earnings update said the group “will keep looking at… opportunities” but preferred to repurchase shares as a way of growing value.
Bloomberg reported over the weekend that Shell “is working with advisers to evaluate a potential acquisition of BP”, whose share price surged as much as 3.5% in early trading today.
Most of the gain had been eroded by midday, however, with the group up only 0.3% as traders in London returned following a long holiday weekend.
Shell, whose market value is almost three times that of BP, was down 2.1%.
Bloomberg, citing people familiar with the matter, added that Shell is “waiting for further stock and oil price declines before deciding whether to pursue a bid”.
Oil prices have suffered heavy falls in recent weeks on concerns that US President Donald Trump’s tariffs will hit demand.
However, they jumped around 2% today.
“The prospect of Shell bidding for BP has been doing the rounds for decades, however, this time it feels different,” noted Kathleen Brooks, research director at XTB research group.
“BP is in a weakened state,” she added, pointing to a recent 5% acquisition in the group by activist investor group Elliott as well as poor first-quater results caused by the recent slump to oil prices.
BP’s net profit slumped 70% in the first quarter, while Shell suffered a drop of 35%.
