LONDON, June 27, 2025 – Oil and gas major Shell has ruled out the possibility of its bid for British energy firm BP, saying there was no proactive consideration for such a move, it informed in a denial note.

Shell said it could not breach UK rules, a statement which bars it from bidding for BP for the next six months.

In a news report, The Wall Street Journal, quoting sources on Wednesday, had said that Shell was in talks to acquire BP. Shell was quick to respond and said that no talks were taking place.

When asked about a potential bid for BP, Shell’s CEO Wael Sawan has time and again said that buying back Shell shares was a more appropriate way to spend money.

“In response to recent media speculation, Shell wishes to clarify that it has not been actively considering making an offer for BP and confirms it has not made an approach to, and no talks have taken place with, BP with regards to a possible offer,” Shell said in a statement.

“This is a statement to which Rule 2.8 of the Code applies and accordingly Shell confirms it has no intention of making an offer for BP. As a result, Shell will be bound by the restrictions set out in Rule 2.8 of the Code.”

As per the UK’s Takeover Code, the six-month ban on making an offer for over 30 percent of BP's shares can be shortened if another bidder for BP emerges or if BP invites an offer, according to the regulations.

BP’s share price has outperformed its rivals in recent months since it announced it was considering boosting its renewable business. However, BP’s stock has underperformed its peers significantly since 2020, when its pivot to renewable energy left it lagging behind. In 2020, BP revealed plans to cut oil and gas production, but the plans have now been shelved. Activist hedge fund Elliott has a stake of over five percent in BP, with sources privy to the matter saying Elliott is of the view that BP could cut costs and investments further to improve profitability.

Takeover rumours have often surfaced around BP, but analysis of its disclosures shows the British energy firm may not be as cheap as its market capitalisation would indicate. There’s more to BP's debt than its net debt.

“Any merger would require a rewriting of the Shell investment case which we believe, at least initially, would come to the detriment of shareholder confidence,” Reuters quoted UBS equity analyst Joshua Stone as having said.

“For BP, we think the likely premium demanded by BP shareholders (including Elliott) also complicates matters and makes a deal harder. Yet, for the same logic as on Shell, the latest news likely means some level of acquisition premium lingers within the shares, providing a floor for the valuation.”

According to UBS estimates, B’'s gearing, or debt-to-capital ratio, outperforms its peers in 2025.

 

Inputs from Saqib Malik

Editing by David Ryder