Shell Says It Has No Intention of Making an Offer for BP

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(Bloomberg) — Shell Plc said it has no intention of making a takeover offer for BP Plc, refuting an earlier report that two of Europe’s biggest companies were in active merger talks.

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The announcement quells speculation that the UK’s two oil majors would end up combining, following several years of poor performance from BP and rising pressure from activist shareholder Elliot Investment Management. Shell’s statement means it is bound by the UK Takeover Code, largely preventing it from submitting an offer for BP for six months.

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“In response to recent media speculation, Shell wishes to clarify that it has not been actively considering making an offer for BP,” it said in a statement on Thursday. The company “has not made an approach to, and no talks have taken place with, BP with regards to a possible offer.

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BP’s shares jumped as much as 10% in New York on Wednesday after the Wall Street Journal reported that the company was in early-stage takeover talks with its larger rival. The stock pared gains as Shell swiftly dismissed the report as “market speculation.”

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BP’s prolonged period of under-performance stems in large part from a net zero strategy embraced by former Chief Executive Officer Bernard Looney. He left the company in 2023 over his personal conduct leaving his successor, Murray Auchincloss, to grapple with a failing clean-energy strategy. 

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Auchincloss announced a “reset” in February that included a pivot back to oil and gas, a reduction in share buybacks and promises to sell assets and pay down debt. The new strategy got a lukewarm reception from many investors, and didn’t go far enough for Elliott, which has continued to push for more radical change. 

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It was against this backdrop that BP became seen increasingly as a potential takeover target. Although no company came forward with an offer, several of BP’s peers and rivals were said to be appraising the situation behind closed doors. 

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Bloomberg reported in May that Shell had been studying the merits of a takeover, but was waiting for further stock and oil price declines before deciding whether to pursue a bid. Abu Dhabi’s main oil company has evaluated whether it could buy some of BP’s key assets should the British firm decide to break itself up or come under pressure to divest more units, Bloomberg reported earlier in June.

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While Shell’s statement douses the majority of the takeover speculation related to BP, the six-month standstill under UK takeover rules isn’t absolute. It could end early under a limited number of exceptional circumstances, including if BP receives an offer from another suitor or invites a fresh approach, or there is a “material change” of circumstances.

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And major changes at BP are set to continue. The company is searching for a new board chairman after Helge Lund announced in April his intention to step down. Lund’s role as a key backer of the net zero strategy made him focus of criticism from Elliott, which remains one of BP’s largest shareholders. 

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—With assistance from Aaron Kirchfeld and Phil Kuntz.

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(Updates with context throughout.)

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