British oil giant Shell has denied that it is in talks with BP over a potential takeover deal worth more than $80 billion. If the deal is completed, the combined company will become the world’s second-largest listed energy company, competing with US energy giant ExxonMobil.
On June 25, the Wall Street Journal published an exclusive report saying that bankers from Shell and BP are in preliminary talks on the terms of a potential mega-merger, and that the talks are progressing slowly and cautiously, with the outcome uncertain.
Sources close to the negotiations said that talks are progressing positively, with the chief financial officers of both companies participating. However, Shell has strongly denied the Wall Street Journal report.
On June 26, Shell released a statement on its official website to clarify recent media speculation: the company is not actively considering making an offer to BP, and confirmed that it has not yet made any contact with BP and has not started any negotiations on a possible acquisition offer. Shell made it clear in the statement: “The company remains committed to achieving greater value with lower emissions by improving performance, strengthening discipline and simplifying operations.”
It is worth noting that this is the second time in two months that rumors about the merger between Shell and BP have appeared in the media. In early May this year, Bloomberg reported that Shell was weighing the pros and cons of acquiring BP and was communicating with consultants.
BP has been less profitable than other supermajors oil companies in recent years, partly because it has scrapped its strategy to transition to renewable energy. Under pressure from activist investors, the company is taking major steps to return to the oil and gas business. A sale could be an option to create additional value for its shareholders in the form of a takeover premium.
It has been reported that the merger of Shell and BP may have an impact on the US offshore oil industry. Both companies have a large number of assets in the deepwater area of the US Gulf of Mexico. Shell has 15 platforms in the deepwater area of the US Gulf of Mexico, including the world’s deepest floating platform Perdido; BP has five platforms in the area, namely Atlantis, Mad Dog, Na Kika, Thunder Horse and Argos, and is investing in the sixth platform Kaskida.
Analysts point out that Shell and BP’s overlapping infrastructure and interests in the Gulf of Mexico could provide valuable opportunities for the merged “super company.”