Oil Giant Merger Speculation Fizzles Out
The BP (LSE: BP) share price surged 7.2% on Wednesday (25 June) amid rumors that Shell (LSE: SHEL) was considering a £200bn mega-merger to create a UK oil supermajor. However, the rally was short-lived after Shell issued a firm denial, stating it had “no intention” of acquiring BP.
By Friday (27 June), both stocks had fallen ~3.8% for the week, leaving investors questioning BP’s future as a takeover target.
Why Did Shell Deny the BP Takeover Rumors?
Shell released an official statement on Thursday (26 June):
“Shell confirms it has not made an approach to BP regarding a possible offer and has no intention of doing so.”
Under UK takeover rules, this means a deal is off the table for at least six months.
Despite the denial, some analysts believe BP remains an attractive acquisition target due to:
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Undervaluation from its scrapped net-zero policies
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Strong synergies with Shell or other oil majors
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Forecasted earnings growth (P/E of 8.5 by 2027)
BP vs. Shell: Valuation Comparison
| Metric | BP (2025) | Shell (2025) |
|---|---|---|
| Forward P/E | 11.5 | 11.0 |
| 2027 P/E | 8.5 | 8.2 |
| Dividend Yield | 6.6% | 4.1% |
While BP offers a higher dividend, Shell appears slightly cheaper long-term.
Could Another Oil Giant Step In?
Analysts speculate potential suitors could include:
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Saudi Aramco (seeking global expansion)
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ExxonMobil or Chevron (strengthening European presence)
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Other supermajors looking for strategic acquisitions
What Should Investors Do Now?
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Short-term traders: The merger hype is over—volatility may continue.
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Long-term investors: BP and Shell remain solid dividend plays, but the energy transition risk persists.
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Alternative energy plays: Consider renewable energy stocks for future growth.
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