Shell Plc is reportedly considering a bold move to acquire British oil rival BP Plc, though any formal decision may hinge on continued declines in oil prices and BP’s stock performance, according to sources familiar with the matter.
Early Talks Signal Strategic Exploration
Shell has been exploring the feasibility of a takeover with its advisers in recent weeks. The company is keeping a close eye on BP’s market valuation and may delay action unless the rival’s stock continues to slide. “As we have said many times before we are sharply focused on capturing the value in Shell through continuing to focus on performance, discipline and simplification,” a Shell spokesperson said.
Shell, with a market cap nearing £149 billion, has nearly doubled BP’s size in recent years. Though both companies were historically comparable in scale, Shell now commands a stronger market position.
Mixed Signals from Leadership
On Friday, Shell CEO Wael Sawan downplayed the immediate prospect of a takeover, telling the Financial Times he would rather continue share buybacks: “We have to have our own house in order,” he said, adding that Shell still has “more work to do.”
Still, Shell’s strong Q1 2025 earnings—including a $3.5 billion share buyback—may give the company flexibility to pursue larger deals. Analysts believe Shell may be preparing in case another suitor approaches BP first.
A potential merger would likely prompt scrutiny from regulators due to its sheer scale, making Shell a formidable competitor to energy giants like ExxonMobil and Chevron.
BP Faces Investor Pressure
BP, for its part, is undergoing a transformation. CEO Murray Auchincloss is seeking to streamline operations by cutting spending, initiating share buybacks, and targeting $20 billion in asset sales by 2027.
The oil major has also seen internal shakeups, with the exit of its strategy chief—a move believed to be influenced by activist investor Elliott Investment Management. The fund has grown its stake in BP to over 5%, positioning itself among top shareholders like Vanguard and BlackRock.
Shell, meanwhile, is keeping its options open. According to insiders, it may opt for smaller acquisitions or continue rewarding shareholders through stock buybacks rather than engage in a megamerger.