Potential suitors eye up BP

Shares in energy giant BP jumped by 4% last week on the news that the Abu Dhabi National Oil Company (Adnoc) had considered buying the British blue chip, says Emma Powell in The Times. While talks “did not progress beyond preliminary discussions”, Adnoc, which has had joint ventures with BP for over 50 years, went as far as to take advice from investment bankers on a potential deal before deciding that BP “would not be the right fit for its strategy”. The news comes at a time when BP has been trading at a discount to its global peers because investors “have penalised it for embracing greener types of energy more keenly than other oil companies”.

Adnoc may have decided against a move, but news of its interest looks likely to reignite speculation that BP, worth £88bn, could be scooped up, says Alex Singleton in The Telegraph. Speculation around BP has been fuelled by a “wave of dealmaking” over the last year as the “global shift to net-zero has prompted consolidation”. For instance, ExxonMobil last year struck a $60bn deal to buy Pioneer Natural Resources, while rival Chevron bought Hess Corporation for the same sum. And British companies across all sectors have attracted “intense takeover interest” due to “depressed values on London’s stockmarket”.

BP’s cheap shares certainly make it an “appealing target”, say Karen Kwok and Yawen Chen on Breakingviews. Other “potential suitors” include Norway’s Equinor or America’s ConocoPhillips. Yet antitrust and national security concerns are a “daunting deterrent”, especially since “Russia’s invasion of Ukraine and the rush to find alternative sources of gas [have] underscored the critical status of energy suppliers”. As a result, any buyer would “face a lengthy period of limbo, prompting other oil groups to jump in”. The upshot is that a BP takeover “may work best on paper”.