Shell Studying Merits Of BP Buyout, Bloomberg News Reports

Shell Plc is working with advisers to evaluate a potential acquisition of rival BP Plc, though it is waiting for further declines in stock and oil prices before deciding whether to pursue a bid, Bloomberg News reported, citing people familiar with the matter. Urvi Dugar and David French reported the story for Reuters.

For several years, BP and Shell were nearly equal in size, but in recent years Shell has grown to nearly twice BP’s size. I Photo: Shell USA Facebook

The report said the oil major has been more seriously discussing the feasibility and merits of a takeover with its advisers in recent weeks, adding that any final decision would likely depend on whether BP’s stock continues to slide.

For several years, BP and Shell were nearly equal in size, but in recent years Shell has grown to nearly twice BP’s size, with a market value of about £149 billion.

When asked about a possible takeover bid for BP, Shell CEO Wael Sawan told the Financial Times he would rather buy back more Shell stock. On an earnings call, when asked about Shell’s capacity to launch sizable acquisitions, he said, “We have to have our own house in order."

He noted that there is “more work to do,” despite progress over the last couple of years. A takeover of its London-based rival would make Shell an even bigger force in the global energy industry, giving it the scale to rival the likes of Exxon and Chevron.