LONDON -- Shares of BP rose more than 3% Tuesday afternoon, with several traders citing market talk of a takeover bid from rival Royal Dutch Shell, reported Reuters.
"BP shares have rallied on the back of enthusiastic buying on talk of Shell's interest in the company," Chris Beauchamp, analyst at IG, told the news agency. "But it seems difficult to believe that Shell would make such a big acquisition at this difficult time for the oil market."
Minutes after BP surged, two rumors surfaced, said a report by The Telegraph: one a potential takeover by Shell, the other that ExxonMobil and Chevron were considering a breakup of the company.
Spokespersons for BP and Shell said they do not comment on market rumors, while some traders dismissed the chatter as spurious, the Telegraph said. But oil and gas shares have had such a torrid time of late that analysts had nevertheless been expecting deal speculation to emerge, the newspaper added.
BP plunged to its lowest level since June 2012 on Monday. The group's depressed share price had prompted Jason Kenney, an analyst at Santander, to tell clients on Tuesday morning that the stock could draw bid talk.
"We see a possible rise in speculation regarding potential corporate M&A," he said, citing Shell and ExxonMobil as possible suitors.
Last month, Oppenheimer analysts said BP could attract a predator and that "continued low oil prices could accelerate industry consolidation."
Also, former BP boss Lord Browne revealed in his 2010 memoirs that he had discussed a merger with his Shell counterpart six years earlier, said the report.
There had been talk of Shell taking out BP in the aftermath of the Gulf of Mexico oil spill disaster as BP's share price collapsed; however, BP's ongoing liabilities for tens of billions of dollars over that spill, and its continued difficulties in rebuilding its reputation and winning projects in the United States have been seen as a deterrent to bidders, according to a report by The Independent.
London-based BP is the single, global brand formed by the combination of the former British Petroleum, Amoco, Atlantic Richfield (ARCO) and Burmah Castrol. BP is a global producer, manufacturer and marketer of oil, gas, chemicals and renewable energy sources.
With U.S. headquarters in La Palma, Calif. (West), and Warrenville, Ill. (East), BP markets more than 15 billion gallons of gasoline every year to U.S. consumers through more than 11,000 BP- and ARCO-branded retail outlets and supplies more than four billion gallons of fuel annually to fleets, industrial users, auto and truck manufacturers, railroads and utilities.
Royal Dutch Shell plc, based in The Hague, The Netherlands, and London, is the parent company of Shell Oil Co., Houston, and its subsidiary, Shell Oil Products US. Shell Oil is a leader in the refining, transportation and marketing of fuels, with a network of approximately 6,000 Shell-branded gas stations in the western United States. Another 8,300 Shell-branded stations in the eastern and southern United States are managed by Motiva Enterprises LLC, a joint venture between Shell Oil and Saudi Refining Inc.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.