Shell is evaluating the potential acquisition of BP, according to Bloomberg’s sources familiar with the matter. The oil giant is reportedly working with advisers to assess the feasibility of the deal but is holding off on a bid until BP’s stock and oil prices decline further.
The deliberations, which have intensified in recent weeks, are still in the early stages. Shell is considering waiting to see if BP’s stock continues to slide or if another suitor makes the first move. BP shares have fallen nearly a third in the past year, as the company’s turnaround plan has failed to inspire investors, and oil prices have plummeted.
One key factor in Shell’s decision-making process is the continued decline in BP’s stock price. With BP’s shares down sharply in recent months, Shell may be preparing to make a bid if the conditions improve further. The possibility of BP reaching out to Shell or another potential acquirer may also play a role in Shell’s decision. While talks are ongoing, Shell may also consider alternative strategies, such as share buybacks or smaller acquisitions, rather than pursuing a megamerger. However, a successful acquisition of BP would give Shell greater exposure to the U.S. market, potentially boosting its output growth.
Both Shell and BP have been competitors for decades, but their paths have diverged in recent years. BP has faced significant underperformance, primarily driven by its net-zero strategy, implemented under former CEO Bernard Looney. The company has shifted its focus back to oil under new CEO Murray Auchincloss. Meanwhile, Shell has been cutting costs, divesting from underperforming renewables units, and refocusing on fossil fuels.
In a statement, a Shell spokesperson emphasized that the company remains focused on performance and discipline, adding that any potential deal would need to generate value in a relatively short period. Shell’s CEO Wael Sawan also noted that Shell will “keep looking at inorganic opportunities” but would be prudent in any decisions.
While a potential combination of Shell and BP would be one of the largest takeovers in the oil industry’s history, Shell has yet to commit to any action. With BP’s market capitalization at around 65.74 billion euros, compared to Shell’s 175 billion euros, the deal could reportedly reshape the oil landscape, though other large energy companies are reportedly also considering whether to pursue BP.
