Shell Weighs BP Takeover Amid Market Weakness and Strategic Reassessment

Shell Plc is reportedly exploring a potential acquisition of rival BP Plc, according to Bloomberg, as it monitors declines in BP’s stock and oil prices before making a move. Discussions have intensified recently, though no final decision has been made. The merger would significantly boost Shell’s market power, positioning it closer to Exxon and Chevron in scale, but would likely face regulatory scrutiny due to its size.

Shell currently holds a market valuation of about £149 billion, nearly double that of BP. Despite the merger talks, Shell CEO Wael Sawan told the Financial Times that he prefers expanding share buybacks, aligning with the company’s recent $3.5 billion repurchase announcement following strong Q1 earnings.

During an earnings call, Sawan noted Shell still has internal work to do before considering major acquisitions. Insiders suggest Shell might wait for BP to initiate contact or for a competing bid to emerge before taking further action.

Meanwhile, BP faces internal and external pressure to cut costs and enhance profitability. CEO Murray Auchincloss has committed to $20 billion in asset sales through 2027 and reduced capital expenditures. The recent exit of BP’s strategy chief follows calls for leadership changes from activist investor Elliott Investment Management, which has grown its stake in BP to over 5%, ranking it just behind BlackRock and Vanguard.

While Shell remains focused on performance, discipline, and simplification, it is keeping strategic options open, including smaller acquisitions over large-scale deals. BP has declined to comment on the takeover speculation.

This potential energy mega-merger underscores the shifting dynamics of the oil and gas sector, as major players seek scale, efficiency, and stronger returns amid evolving market conditions.