BP Shell merger: Is the biggest merger ever in oil and gas industry happening? Check market cap, debt, valuation

Shell denied that it was in talks to buy BP after the Wall Street Journal reported on Wednesday that the oil major was in early discussions over a takeover of its British rival. BP's shares have fallen by 23 per cent over the past year, underperforming the blue-chip FTSE 100 Index, which gained 5.3 per cent during the same period. Shell's shares have risen more than 8 per cent, Reuters reported. A tie-up between Shell and BP would be one of the biggest mergers ever in the oil and gas industry and would give it added heft against US oil majors ExxonMobil and Chevron, and France's TotalEnergies, as per AFP report.

"No talks are taking place. As we have said many times before, we are sharply focused on capturing the value in Shell through continuing to focus on performance, discipline and simplification," a Shell spokesperson said.

The latest in a series of rebuttals by Shell follows recent repeated assertions by CEO Wael Sawan that Shell had a very high bar for big acquisitions and buying back shares was a better allocation of money than the possibility of buying BP.

BP-Shell Market Cap, Value

BP has been the subject of takeover talks for several years because of its stock's relative underperformance, but analysis of its disclosures shows that the British energy group may not be as cheap as its market valuation would suggest.

The company was valued at nearly $80 billion on Wednesday with net debt of $27 billion while Shell's market capitalisation stood at more than $208 billion.

BP's American depository shares were up 1.5 per cent at $30.40 and Shell was down 0.7 per cent at $69.70.

If Shell were to submit a bid, it would be a rare attempt by an oil major to acquire such a large rival in the face of heightened regulatory scrutiny of such deals. A deal of this magnitude has not been attempted in the energy industry since Exxon and Chevron held preliminary talks during the COVID-19 pandemic to discuss a combination that would have been the biggest merger of all time, Reuters reported.

FAQs

Q1. Which are major oil companies in world?
A1. Shell and BP are British oil giants, US oil majors are ExxonMobil and Chevron, France has TotalEnergies.

Q2. What are current share prices of BP and Shell?
A2. BP's American depository shares were up 1.5 per cent at $30.40 and Shell was down 0.7 per cent at $69.70.