Why BP Became Target of Biggest Potential Oil Deal in Decades
Why BP Became Target of Biggest Potential Oil Deal in Decades
Jul 01, 2025
Reports and rumors have intensified this year that BP is in the crosshairs of rivals, especially Shell, for a potential takeover that would be the largest deal in the oil industry since the Exxon and Mobil merger in 1999.
Five years of U-turns in strategy and the abrupt departure of the architect of the ‘greener’ BP, Bernard Looney, have left investors unconvinced in the direction the UK supermajor is taking and whether it could – at some point, finally – convince shareholders and the market that it is a stock worth holding.
The latest speculation, from a few days ago, again placed UK-based rival Shell as a potential buyer of BP. Shell dismissed the latest market talk with a statement, but didn’t close the door on a potential bid down the line, or “if there has been a material change of circumstances.”
Shell, and any other suitor for that matter, would need to carefully consider the idea of a takeover because of the enormity of a deal, the debt level and ratio at BP that are higher than these of its peers, and likely stumbling blocks in regulatory approvals in numerous jurisdictions, including at home in the UK.
How BP Became the Weakest Link
A BP-Shell tie-up has been the talk of the market for years. BP’s stock has underperformed those of its peers for years, and the two strategy resets in five years this decade alone haven’t helped investors believe that either of the two strategy shifts could bring significant value.
First it was former CEO Looney who, in 2020, steered BP into turning into an integrated energy company from an international oil major by reducing its oil and gas production and boosting investments in low-carbon energy solutions. This “performing while transforming” strategy failed to convince investors as returns from renewables were meager, at best, and the stock market did not appreciate reduction of the most profitable business, oil and gas, at the expense of costly and lower-value-creating renewables.
Oilprice.com
