Shell Eyes BP Acquisition in Bold Energy Sector Power Play

Oil titan Shell makes moves to swallow rival BP—because nothing says ’energy transition’ like old-school consolidation.

Market watchers brace for regulatory fireworks as the fossil fuel giants dance toward a monopoly waltz. Analysts whisper: ’Just hedge funds playing chess with rigs and pipelines again.’

Bonus jab: Someone check if this deal gets paid in carbon credits or actual money.

BP and Shell were nearly equal in valuation for several years, but in the last few years, Shell has grown to nearly twice BP’s size, with a market value of roughly 149 billion pounds.

When questioned by the Financial Times on Friday regarding a potential takeover offer for BP, Wael Sawan, Shell’s chief, stated that he would prefer to repurchase more Shell stock.

Despite improvements over the past few years, he added, “We have to have our own house in order,” and that there is still “more work to do” when questioned about Shell’s ability to make large acquisitions during an earnings call. Shell would become even more powerful in the global energy sector if it were to acquire its rival in cross-town London.

This would give it the scale to compete with companies like Exxon and Chevron. Given the size of the deal, a merger would also probably draw regulatory attention.

Shell started a $3.05 billion share buyback this week after announcing impressive first-quarter results that exceeded profit projections. According to people who spoke to Bloomberg News, Shell may also wait for BP or another suitor to initiate contact. In this case, its ongoing efforts could help it prepare for the possibility.

Shell may concentrate on share buybacks and bolt-on acquisitions instead of a megamerger because talks are still in their early phases.

When questioned about the report, a Shell representative stated, “As we have stated numerous times previously, we are sharply focused on capturing the value in Shell through continuing to focus on performance, discipline, and simplification.”. BP chose not to respond.

BP CEO Murray Auchincloss has announced plans to sell $20 billion worth of assets through 2027, reduce spending, and repurchase shares in response to pressure to increase profitability and reduce costs.