BP draws takeover interest from UAE oil giant

THE United Arab Emirates’ state oil company is said to have explored a multibillion-pound takeover of BP in a sign that depressed stock market valuations in the UK have made even the biggest companies bid targets.

The Abu Dhabi National Oil Company (Adnoc) and BP spoke directly in recent months and Adnoc also sought advice from investment banks on a potential deal, sources told Reuters.

Deliberations did not get further than preliminary discussions after Adnoc concluded BP was not the right fit for its strategy. The company was also concerned about the politics of any bid.

A takeover of BP would almost certainly draw government involvement because of its significance to Britain. As well as playing a crucial role in the country’s energy industry, it is a significant taxpayer and a cornerstone of the London Stock Exchange.

Scrutiny of UAE investments in Britain has also been heightened by the recent Abu Dhabi-backed takeover bid for The Telegraph. State media company IMI provided the bulk of the funding for joint venture Redbird IMI’S Telegraph offer. The deal, which was struck through a loan agreement with the Barclay family, has effectively been blocked after ministers unveiled laws to block state ownership of British newspapers.

Adnoc is run by Sultan Ahmed al-jaber, who is also the chairman of IMI. The oil industry has experienced a wave of deal-making over the past year as a global shift to net zero has prompted consolidation.

Exxonmobil last year struck a $60bn (£48bn) deal to buy Pioneer Natural Resources, while rival Chevron agreed to buy Hess Corporation for the same price. The takeovers led to speculation that BP could also be a target. However, Murray Auchincloss, the BP chief executive, dismissed this last October, saying: “I don’t feel vulnerable.”

Adnoc’s interest is likely to reignite speculation that BP, which is worth £88bn, could be acquired.

British companies across all industries have attracted intense takeover interest because of depressed values on London’s stock market. BP’S share price values it at 7.54 its earnings, compared with 12.98 for US rival Exxon Mobil.

BP declined to comment. Adnoc was contacted for comment.