BP’s Stock Surges Following Reports of Contemplated Takeover by UAE Oil Company

BP shares surged on Friday following reports that the state-owned oil company of the United Arab Emirates (UAE) had considered, but ultimately decided against, making a bid for the London-listed energy giant.

By mid-morning on Friday, BP’s shares had climbed approximately 3.1%, contributing to a broader positive trend in the market as the FTSE 100 approached record highs. Shell, BP’s rival, also experienced a notable increase of 2.1%.

According to Reuters, the Abu Dhabi National Oil Company (Adnoc) concluded that BP was not the ideal fit for its strategic objectives, opting not to pursue a potential takeover bid. This decision was reportedly based on insights from three undisclosed sources. While BP chose not to provide a comment to the PA news agency, Adnoc did not immediately respond to Reuters’ request for comment.

Sources revealed to Reuters that Adnoc had engaged in direct discussions with BP in recent months, with the UAE oil company even consulting investment banks regarding the feasibility of a deal.

In recent times, many UK companies have become targets for takeover bids as foreign investors perceive them to be undervalued. Some companies have opted to depart from the London market entirely or pursue dual listings across multiple markets.

Currently, two potential buyers are vying to acquire DS Smith, a prominent London-listed packaging corporation, for a sum exceeding £5 billion. Concurrently, Flutter Entertainment, the gambling conglomerate responsible for brands like Paddy Power and Betfair, is contemplating a primary listing shift to the US, boasting a market valuation exceeding £27 billion.

BP’s share price has consistently lagged behind that of its international counterparts, potentially leaving the company susceptible to takeover interest from rival firms. According to data from the US Energy Information Administration, mergers and acquisitions within the oil and gas sector surged last year to levels unseen since 2012, highlighted by notable transactions like ExxonMobil’s acquisition of Pioneer Natural Resources for $64.5 billion and Chevron’s $60 billion takeover of Hess.

For BP, the past year has been marked by significant changes. In January, Murray Auchincloss assumed the role of CEO, succeeding Bernard Looney, who stepped down following revelations that the board had been misled about Looney’s prior interpersonal relationships with colleagues.