Shell says not in discussion with rival oil firm BP for takeover: Report

BP is currently valued at $80 billion and a deal with Shell could take it past the $83 billion merger that created Exxon Mobil. Bloomberg

Oil and gas giant Shell has denied a report that it is in discussion to acquire its rival energy firm BP in what could turn out to be one of the largest M&A deals ever.

Earlier, a report by The Wall Street Journal on June 25 had said that both British oil majors are in active talks with each other and BP is “considering the approach carefully”. The deal, if done, will put Shell in a solid position compared to its bigger rivals Exxon Mobil and Chevron, the report said.

However, a Shell spokesperson denied the WSJ report soon after it broke. "This is further market speculation. No talks are taking place," Bloomberg reported citing the spokesperson.

Shares of BP rose as much as 10 percent in New York earlier on Wednesday on the report that it was in early-stage takeover talks with Shell. Shares of the company erased most of those gains to trade 1.2 percent higher as of 12:44 p.m. local time.

The newspaper said any sort of agreement is not certain yet between the two of the biggest oil companies that control some of the most important energy sources.

BP is currently valued at $80 billion and a deal with Shell could take it past the $83 billion merger that created Exxon Mobil, WSJ said. Shell has a market value of over $200 billion and its stock has outperformed BP in the last few years, the report said.

BP is under intense pressure after years of under-performance and the intervention of aggressive activist shareholder Elliott Investment Management. Speculation has been growing that the London-based company would become a takeover target, and Bloomberg reported in May that Shell had been studying the merits of a deal.

A successful combination of Shell and BP would become one of the oil industry’s largest-ever takeovers, bringing together the iconic British majors in a transaction that’s been discussed on and off for decades. The companies were once close rivals — with a similar size, reach and global clout — but their paths have diverged in recent years after BP moved too quickly into low-carbon energy.

With Bloomberg inputs