Shell has denied a media report that it plans to buy its smaller rival BP in a deal that would be worth about US$80 billion (A$122.9 billion).
“This is further market speculation. No talks are taking place,” the London-based multi-national oil and gas company was quoted as saying in a statement on Wednesday.
Shell responded to a story in the Wall Street Journal (WSJ) newspaper that it was holding early-stage talks to acquire BP in what would be the largest oil deal in a generation.
Talks between company representatives were active and BP was considering the approach carefully, the WSJ wrote.
“Potential terms of any deal couldn’t be learned and a tie-up is far from certain, the people familiar with the matter warned,” it reported.
“Bankers working on behalf of the companies have been engaged in the discussions, which are moving slowly, the people said.”
Buying BP would better enable Shell to take on larger competitors such as Exxon Mobil and Chevron and give it assets in regions where it has limited exposure like the Gulf of Mexico and some liquefied natural gas (LNG) markets.
But a Shell spokesperson was quoted in a Reuters story as saying: “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.”
Established in 1909 and formerly known as British Petroleum, BP has become vulnerable to a takeover as its shares have fallen by 23% over the last year while the British sharemarket rose 5.3% while Shell shares have risen more than 8%.
It has faced difficulties in its transition to renewable energy, leading to internal restructuring and asset sales.
BP shares (LON: BP) shares closed 3.80 (1.03%) lower at GBP 364.15 on Wednesday, capitalising it at GBP 52.52 billion.
Shell (LON: SHEL) shares fell 6.72 (0.26%) to GBP 2,577.78, implying a market value of GBP 151.61 billion.
