6th May 2025 09:30
(Alliance News) - BP PLC shares jumped on Tuesday following reports that its rival, Shell PLC, is exploring a possible acquisition of the oil and gas company.
Shares rose as much as 2.5% in early trading after it was reported that Shell has been weighing the merits of a takeover with advisers in recent weeks.
BP's stock has slumped following a period of massive investment in renewable energy which failed to deliver enough profits to please investors.
In February, it revealed a new growth strategy focused on extracting more oil and gas after pressure from some investors to boost profits at the firm.
At the time, bosses said the business went "too far, too fast" on green energy and confirmed plans to heavily reduce spending on renewables.
It is also facing pressure from influential US hedge fund Elliott Management, which took a nearly GBP4 billion stake in the company – just under 5% of its shares – earlier this year.
The move is understood to have been aimed at pushing BP back towards fossil fuels to boost profit.
In April, Chief Executive Murray Auchincloss said the company has been making progress with the strategy despite wider economic uncertainty.
But it has done little to arrest the slide in BP's share price, which is down about one-third compared with the same point last year.
BP's market capitalisation is about GBP56.5 billion based on its current shares, compared with Shell's GBP146.7 billion.
Bloomberg reported last week that Shell has been weighing a bid based on whether BP shares continue to slide.
A merger would be among the largest in the oil industry's history, and would end decades of speculation over a possible deal between two of the UK's biggest companies.
A Shell spokesman said: "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."
Shell shares were down 1.4% at 2,452.00 pence each on Tuesday morning in London, while BP shares were up 1.1% at 354.19p each. Shell has a market cap of about GBP146.60 billion, compared to BP's GBP56.51 billion.
BP has been approached for comment.
By Alex Daniel, PA Business Reporter
Press Association: Finance
source: PA
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