Oil giant Shell denies plan to acquire rival BP in £60 billion merger

Shell's denial of BP takeover reports has triggered a UK rule barring it from making an offer for at least six months

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Oil and gas giant Shell on Thursday dismissed speculation that it is planning a takeover of British rival BP, following reports suggesting the companies were in early discussions for a landmark £60 billion merger.

 

In a press release, Shell clarified that it “has not been actively considering making an offer for BP” and “confirms it has not made an approach to, and no talks have taken place with, BP with regards to a possible offer”.

 

The response came after The Wall Street Journal published a report late Wednesday claiming that Shell was engaged in preliminary talks to acquire BP, in what would be the largest oil industry deal in decades. The article cited unnamed sources who said discussions were ongoing and that BP was weighing the proposal. If true, the merger would unite two of the largest global oil companies, potentially strengthening Shell’s position against American energy titans such as ExxonMobil and Chevron.

 

“Shell wishes to clarify that it has no intention of making an offer for BP,” the company said in its statement. “We remain focused on delivering more value with fewer emissions through performance, discipline, and simplification.”

 

Under Rule 2.8 of the UK Takeover Code, a company that publicly states it does not intend to make an offer is barred from doing so for at least six months. Shell's denial of the reports has now triggered this UK regulation.

 

“We remain focused on delivering more value with fewer emissions through performance, discipline, and simplification,” Shell stated. 

 

BP: Leadership changes, low investor confidence

The speculation around a potential acquisition comes at a time when BP has struggled with investor confidence since it shifted its focus away from fossil fuels towards renewable energy. In an effort to restore this, in February the company announced its renewed focus on fossil fuels. The British energy major has also faced mounting pressure from investors, especially activist hedge fund Elliott Investment Management, as earlier reported by Business Standard. The fund holds more than 5 per cent of BP’s shares, valued at approximately £3.7 billion, and has pushed for changes including substantial cost reductions and asset sales.

 

As part of its restructuring, BP is exploring the sale of its global lubricants division, which includes the Castrol brand. The business, which is 51 per cent owned by BP’s Indian subsidiary Castrol India, is estimated to be worth around ₹11,000 crore, and the global sale could raise as much as $10 billion, according to investment bankers.

 

The company is also considering offloading parts of its solar energy venture, Lightsource BP, The Wall Street Journal report said. Adding to the uncertainty, BP recently announced that Chairman Helge Lund intends to step down, likely in 2026.