ALEX BRUMMER: BP’s survival is core to UK

A succession of strategic errors and management disruptions has made BP a sitting duck for takeover.

The oil and gas giant is particularly vulnerable in that it has a departing chairman, Helge Lund, hanging on to his job and couldn’t be relied upon to put up a muscular defence or hold out for a value which would properly reward shareholders.

It is vital that Dame Amanda Blanc, who is leading the search for a successor, moves swiftly. When in difficulties, companies have a right to suspend sclerotic governance procedures.

BP’s spin on the green roulette wheel under the leadership of Bernard Looney, and the personal entanglements which hurried his resignation, have been disastrous.

So far, his Canadian successor Murray Auchincloss has failed to steady the ship. It is unusual for corporations to switch chairman and chief executive simultaneously. Sometimes necessity dictates. 

With a market value of just £58billion, BP is vulnerable. It is a bargain of the first order given a sum-of-the-parts valuation of £120billion.

No wonder rivals such as Chevron, Exxon Mobil, Total and Middle East investors are casting their eyes over one of the FTSE 100’s behemoths. 

As The Mail on Sunday has reported, senior investment bankers have been touting the idea of an all-British oil major, formed by a merger of Shell and BP, since the spring.

A break-up or sale to overseas interests of BP should not be an option. 

Unlike BAE Systems or Rolls-Royce, it has no golden share to protect the company.

Yet the 116-year-old UK giant, founded as the Anglo-Persian Oil Company, is part of the country’s commercial DNA.

Down the decades it has been a powerful political and economic force for Britain around the globe. 

It also has a remarkable record on exploration and production of liquefied natural gas and oil as well as a world-class trading operation.

Moreover, having survived an existential crisis in 2010, after the disastrous explosion on the Deepwater Horizon platform in the Gulf of Mexico (now America!), the 28 per cent dip in the stock over the last year is as nothing.

It should not be forgotten how it was brought back from the near-dead by Texan Bob Dudley after former US president Barack Obama weaponised its problems for political reasons.

A look at the BP share register shows it would be a hard company to defend from overseas marauders. 

BlackRock holds a chunky 9.27 per cent. Legal & General is the biggest UK holder, in seventh place with just 1.03 per cent.

That means all which stands between it and being swallowed is a Labour government that has declared war on fossil fuels, even though big oil is among the significant investors in green choices such as hydrogen.

The best defence strategy for BP is rapid-fire change at the top of the kind which has been seen at Unilever and elsewhere.

If a deal is to be done, then the least bad outcome would be a merger with Shell, even though Shell chief executive Wael Sawan publicly argues that buying back shares is a preferable strategy to creating a UK-based rival to Exxon Mobil.

But big deals are notoriously difficult to execute calmly and successfully.

A Shell deal is also risky in that the Anglo-Dutch group flirts with shifting its listing to New York.

There should be no other choice for BP but keeping it British and independent.