The largest deal since the 1998 ExxonMobil merger
Shell: "Just market speculation... No negotiations"
The Wall Street Journal (WSJ) reported on June 25 (local time) that global energy giant Shell is in early-stage talks to acquire its rival BP.
According to sources, BP is carefully reviewing Shell's acquisition proposal, and active negotiations are underway between the two companies.
However, sources said that the potential terms of the deal have not yet been disclosed, and the likelihood of an actual transaction remains uncertain. Investment banks representing both sides are participating in the discussions, but the negotiations are progressing slowly.
BP has faced financial difficulties since the oil spill in the Gulf of Mexico in 2010. The explosion of BP's drilling rig, Deepwater Horizon, is considered the worst oil spill in U.S. history. In addition, BP has been underperforming compared to competitors that focus on traditional fossil fuel businesses such as oil and gas, as the company has been pursuing a strategy to scale down its fossil fuel segment and expand its renewable energy business. As a result, activist hedge fund Elliott Investment has recently targeted BP for its actions.
BP's current market value is about $80 billion. If the merger and acquisition is completed, it would be the largest energy company merger since the $83 billion merger between Exxon and Mobil in the United States in 1998.
WSJ reported that if this acquisition goes through, Shell would secure a strong foundation to compete with energy giants such as ExxonMobil and Chevron. The company could achieve economies of scale, expand its global business influence, and strengthen its dominance in the liquefied natural gas (LNG) sector.
Following the news of the negotiations, BP's share price on the New York Stock Exchange surged as much as 10% at one point before closing up 1.64%.
However, a Shell spokesperson dismissed the acquisition rumors, stating, "This is just another market speculation, and no negotiations are taking place."
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