Likely to Pressure BP's Management Strategy
Including Green Energy Initiatives
Global activist fund Elliott Management (hereinafter Elliott) has acquired shares in the British oil giant BP. Given Elliott's tendency to pressure management strategies such as executive dismissals or business separations to increase shareholder returns, it is expected to urge changes at BP as well.
The Wall Street Journal (WSJ) reported on the 9th (local time), citing sources, that although the exact size of the stake purchased is unknown, Elliott is likely to apply active pressure for BP's performance recovery.
Elliott is a U.S. hedge fund managing about $70 billion in assets and is considered one of the most influential investors on Wall Street.
BP's management strategy has changed rapidly in recent years. For the past five years, it has expanded its scope from traditional energy sources such as oil and gas to low-carbon renewable energy sectors like wind power, solar power, and electric vehicle charging.
However, as BP's stock price lags behind competitors such as Shell and ExxonMobil, BP investors are demanding a new strategy from the company. As of the closing price on the 7th, BP's market capitalization is only half that of Shell and less than one-fifth of ExxonMobil's.
BP sharply cut dividends due to the impact of the COVID-19 pandemic and has since been working to reduce debt and cut costs. With Elliott's increased stake this time, pressure to improve BP's performance is expected to intensify.
BP has stated that it is making meaningful progress in cost reduction by selling its German refineries and U.S. onshore wind business, among other measures, and holds dominant positions in regions such as Iraq and the Gulf of Mexico.
Last month, BP announced plans to lay off about 4,700 employees, more than 5% of its total workforce, and reduce the number of contract workers. It also reported that due to refining margins and other factors, it could incur losses of up to $300 million in earnings for the fourth quarter of last year. BP is scheduled to announce its earnings on the 11th.
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