Shell is reportedly considering a takeover of BP, whose performance has recently declined after its early push for a rapid energy transition, according to Bloomberg. The news comes from unnamed sources familiar with the discussions.
However, Shell’s CEO, Wael Sawan, told the Financial Times that he would prefer to buy back Shell’s own stock rather than pursue a BP acquisition. “We will always look at these things, but you are also looking to see what the alternative is,” Sawan said. “Right now, buying back Shell [shares] continues to be absolutely the right alternative.”
A Shell spokesperson also confirmed the company’s focus on performance and disciplined growth in response to the report, stating, “We are sharply focused on capturing the value in Shell through continuing to focus on performance, discipline and simplification.”
Despite this, sources told Bloomberg that Shell is evaluating a potential takeover, which would depend on whether BP’s stock continues to slide. BP’s stock has fallen nearly 30% over the past year. However, the sources emphasized that no decision has been made, and Shell could choose to concentrate on stock repurchases and smaller acquisitions instead.
BP reported a net profit of $1.38 billion for the first quarter, falling short of analysts’ expectations, with a 49% year-over-year decline. It also announced $750 million in share buybacks.
In contrast, Shell reported stronger-than-expected net earnings of $5.58 billion for the same period, though still down 28% from the previous year. Shell also announced $3.5 billion in stock buybacks for the second quarter.
Currently, Shell’s market value is nearly double that of BP, standing at about $200 billion compared to BP’s $74 billion.
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