Business
Shell to take over BP? Is it about to happen?
FOR the past six months, financial newspapers in the UK and around the world have been focused on two major oil companies – Shell and BP. Today, however, the two companies are reportedly engaged in serious discussions. One company has declined to comment, while the other has remained silent. The British press is generally supportive of a takeover by Shell, emphasizing that as a British company, Shell represents a “Jewel in the Crown” that should remain under British ownership rather than being acquired by a foreign entity.
Meanwhile, BP is struggling to keep pace with its peers and has been divesting parts of its core business, such as Castrol lubricants. BP may have made a critical error by moving too quickly away from oil and gas towards alternative energy sources like wind and solar, aiming to lead the energy transition. This shift left the company lagging and weakened, making it vulnerable to acquisition. Over the past 12 months, BP’s share price has dropped by 22 percent. At its peak, BP was so powerful it could influence governments and interfere in domestic politics in some parts of the world. Today, all of that is history, as BP is now searching for potential buyers. Shell is a British multinational oil and gas company listed on the London Stock Exchange, making it a good fit to acquire BP due to their similar cultures. The main difference is that Shell started as an oil trading company, while BP, through the British Empire, acquired oil and gas fields in some of the richest hydrocarbon countries in the world, including the Arabian Gulf, starting in Bahrain, Iran, Iraq, and Kuwait.
Interestingly, BP chose not to invest in Kuwait, claiming it already had too much oil under its control. Shell, however, has stated it has no intention of making a takeover offer for BP and has denied claims of being in active merger talks. It may be taking its time to decide, possibly waiting for other companies to submit bids before evaluating its own offer. Given the similarities and synergies in place, Shell is well-positioned to make an offer. If the acquisition is completed, Shell would become the largest oil company, surpassing ExxonMobil and Chevron. BP’s current market value is estimated at around $80–83 billion, while Shell is valued at approximately $200 billion, nearly three times BP’s worth.
How far and for how long the talks or speculation surrounding a potential BP takeover will continue remains uncertain. The ongoing rumors are creating volatility and may further weaken BP’s position, potentially contributing to a decline in its market value. Other oil giants, such as the Abu Dhabi National Oil Company (ADNOC), are reportedly exploring the possibility of acquiring parts of BP. However, ADNOC appears more interested in acquiring specific segments of the company rather than taking over BP as a whole. BP, as a global energy giant, does not align entirely with ADNOC’s structure.
It is significantly larger, with a wide array of operations and an expansive international footprint, which would make full acquisition and management a difficult task. In a few days, we may learn the outcome of these discussions and whether Shell intends to move forward with a takeover. BP appears poised for acquisition, but it needs the right partner, one capable of unlocking the full benefits of potential synergies. Undoubtedly, Shell is the most prepared and best positioned to take over. For other international oil companies, acquiring and managing one of the historic “Seven Sisters” would be a significant challenge. Shell, on the other hand, seems to be taking its time to determine the right price before making a move to acquire its longtime peer and competitor.
By Kamel Al-Harami
Independent Oil Analyst
Currency traders watch monitors near a screen showing the Korea Composite Stock Price Index (KOSPI) at the foreign exchange dealing room of the Hana Bank headquarters in Seoul, South Korea on Oct 21. (AP)
TOKYO, Oct 22, (AP): Asian shares were mostly lower Wednesday on selling of technology shares following a lackluster day on Wall Street. U.S. futures edged higher, while crude oil prices rose more than $1 a barrel. Chinese markets retreated after US President Donald Trump cast doubt on whether or not he will meet with Chinese leader Xi Jinping later this month.
“Maybe it won’t happen, maybe it won’t happen,” he said while hosting a lunch for Republican Party senators at the White House. However, Trump also said he was expecting “to do well” in negotiations with China. “I’m going to see President Xi in two weeks. … We’re going to meet in South Korea, ” he said. “We’re going to talk about a lot of things they want to discuss.”
Trump is traveling in the next several days to Japan and South Korea, in part, to finalize the terms of investments from those countries as part of an agreement to minimize the tariff rates Trump is charging on foreign goods. Hong Kong’s Hang Seng dropped 0.8% to 25,819.10, while the Shanghai Composite index shed 0.1% to 3,914.97.
Japan’s benchmark Nikkei 225 wavered between slight gains and losses a day after its parliament chose Sanae Takaichi to be its first female prime minister. It closed almost flat at 49,307.79, pulled lower by declines for tech companies like SoftBank Group Corp., whose shares fell about 5%. The government reported that Japan’s exports grew 4.2% in September from a year earlier, boosted by robust shipments to Asia that offset a 13% decline in those destined for the US.
Auto shipments fell 24% as they were hit hard by Trump’s tariff hikes. Australia’s S&P/ASX 200 lost 0.7% to 9,030.00, while South Korea’s Kospi rose 1.6% to 3,883.68. Tuesday on Wall Street, the S&P 500 inched up a fraction of a point, leaving it just slightly below its all-time high set earlier this month. The Dow Jones Industrial Average rose 0.5% to a new record and the Nasdaq composite slipped 0.2%.
General Motors rallied 15.1% after reporting stronger quarterly results than analysts expected, while also raising its forecasts for some full-year financial targets. Warner Bros. Discovery leaped 10.9% after the company said it’s now considering other options besides its previously announced split of Discovery Global off Warner Bros., which could be more profitable for shareholders.
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