- BP shares rose 1% on May 6 following reports that Shell may pursue a takeover.
- Shell is monitoring the situation, but may wait for oil and BP stock prices to fall further before acting.
- No formal offer has been made, and both companies declined to confirm any acquisition talks.
After reports suggested Shell might pursue an acquisition, BP shares climbed on Monday, May 5. Investors responded quickly to the news, pushing BP’s stock up during morning trading.
Bloomberg reported that Shell monitors BP’s stock closely. The major oil companies may wait for a further drop in oil prices and BP’s valuation before moving. So far, Shell has not submitted a formal offer.
A merger between the two energy giants could create a company worth over £200 billion ($250 billion). BP’s value stands at £56 billion ($70 billion), while Shell holds a market capitalisation of £149 billion ($187 billion). The gap gives Shell an advantage in any future negotiations.
BP shares opened 3.5% higher and ended the day up 1%. In contrast, Shell’s stock fell 1.5%, as investors reacted cautiously to the uncertainty surrounding the rumours.
BP refused to comment when AFP reached out. “We do not comment on market speculation and rumours,” the company said. Shell also avoided a direct response and referred to comments from CEO Wael Sawan. On May 3, Sawan said the company would “continue to evaluate opportunities” but remains focused on share buybacks.
Activist investor Elliott Management recently acquired over 5% of BP’s shares. BP’s leadership now pressures the firm to boost shareholder value, and analysts believe Elliott’s move may influence BP’s response to any acquisition offer.
BP also released its first-quarter earnings last week. The company reported a sharp drop in profit, which fell to $687 million from over $2 billion last year. Lower oil prices and reduced refining margins contributed to the weak result.
Shell also posted weaker earnings for the quarter. Its profit dropped by one-third year-on-year, but still beat analysts’ expectations. Shell continues to prioritise shareholder returns through dividends and buybacks.
Kathleen Brooks, an XTB analyst, noted the takeover speculation’s renewed seriousness. “The idea of a Shell bid for BP has circulated for decades,” she said. “But this time it feels different.”
Oil companies face pressure to cut costs and adapt to cleaner energy demands. Many firms now seek strategic mergers to strengthen their market position. A Shell-BP tie-up would mark one of the industry’s biggest deals.
Despite the buzz, Shell has not set a timeline or revealed any deal terms. Market observers believe the company will wait for more favourable conditions before acting.
Investors now watch both companies for further signals. The speculation alone has already stirred the market and raised expectations of potential consolidation in the sector.