Shell PLC (LSE:SHEL, NYSE:SHEL) has denied reports suggesting it is in early-stage discussions to acquire rival BP, following a Wall Street Journal article about purported takeover talks that caused BP's shares to surge.
A Shell spokesperson reportedly dismissed the claims as market speculation shortly after the report came out.
“No talks are taking place,” the spokesperson said, according to Reuters. “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.”
BP declined to comment on the matter, the report said.
The speculation led to a notable market reaction, with BP's shares rising by as much as 10% before settling down by about 1%. Shell's shares were down by about 0.26% on the day.
Strategic shifts and pressure on BP
Analysts have long speculated about a potential merger between the two FTSE 100 giants, especially as BP has faced challenges in regaining investor confidence, with the company facing pressure from activist firm Elliott Investment Management.
After acquiring a 5% stake in BP, Elliott has been pushing for strategic changes similar to Shell’s approach under CEO Wael Sawan, including scaling back green energy investments and focusing on liquefied natural gas growth.
BP, under current CEO Murray Auchincloss, has been shifting away from former CEO Bernard Looney's green initiatives after his abrupt departure in 2023 amid personal conduct issues. Earlier this year, BP abandoned its fossil fuel reduction target and moved to sell its Castrol lubricants business, signalling a significant strategic reset.
Consolidation and regulatory challenges
While the possibility of a Shell-BP merger remains uncertain, the energy sector continues to experience significant consolidation, with recent large-scale mergers such as Exxon's acquisition of Pioneer Natural Resources and Chevron's ongoing acquisition of Hess.
Any potential deal between Shell and BP would likely face substantial regulatory scrutiny and could have significant implications for the global energy landscape.