Shares in oil giant BP (BP) climbed higher today on reports that several of its major rivals are looking at making a takeover bid.
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According to a report in the Financial Times, oil major Shell (SHEL), which reportedly is looking into making a bid for its struggling rival, could face some heavyweight competition.
Rivals Emerge
The FT article suggests that major firms such as Chevron (CVX), Exxon Mobil (XOM), TotalEnergies (TTE), and Abu Dhabi’s Adnoc are also ‘running the numbers’ to get BP on the cheap. It reported that oil trader Vitol is also interested in buying parts of the business.
The FT said that BP’s assets are worth over $159 billion much higher than its current market valuation of £$75 billion. The $159 billion figure, however, does not take into account its huge $70 billion debt and long-term liabilities.
BP has been battered in recent months by its tilt towards renewable energy, then its U-turn back to a fossil fuel focus following pressure from activist investor Elliott Management. Its chairman Helge Lund will also step down sometime next year.
Its share price has plunged 20% over the last 12 months, making it vulnerable to takeover talk. One of the people making that claim to the FT was, interestingly, ‘someone close to Elliott Management.’ “The continued underperformance of BP makes it open to a takeover,” the person said.
BP Has the Gas
The FT said Shell is interested in BP for its gas and LNG assets, whilst Exxon and Chevron could be tempted by its gas and trading businesses.
However, analysts have warned of the intricacies of merging Shell and BP, two significantly sized businesses together. Shell has a valuation of $196 billion.
The U.S. firms may also be put off by the political implications of a transatlantic deal.
But one investor said that the emergence of potentially multiple bidders could force Shell’s hand. “Could they really stand on the sidelines and let someone else buy BP?” the person said.
Shell and Chevron stock were both up 1.3% with Exxon up 1% today.
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