BP placed on bid alert as Shell takeover ban ends on Boxing Day

Takeover speculation is set to resume at BP as a ban on Shell bidding for its oil and gas rival ends on Boxing Day.

BP remains a target despite last week dramatically hiring its first outsider as chief executive in its 116-year history as it seeks to fend off potential suitors and drop its ill-fated push on Net Zero.

Meg O’Neill, boss of Australia’s biggest energy firm Woodside, will join in April to replace Murray Auchincloss, who has stood down with immediate effect.

New BP chairman Albert Manifold said ‘increased rigour and diligence’ were needed ‘to make the necessary transformative changes to maximise value for our shareholders’.

But the sudden changes at the top are unlikely to quell bid talk before O’Neill arrives, analysts say.

‘Takeover chatter will inevitably resurface,’ said Maurizio Carulli, energy analyst at wealth manager Quilter Cheviot. ‘In the short term expect some uncertainty.’

He also noted Shell had form in targeting firms under new management. It pulled off a daring £47 billion swoop on BG Group in 2015 – months after Helge Lund took charge at the energy group that was once part of British Gas.

Lund, who later left BG, was ousted as chairman of BP this year under pressure from activist hedge fund Elliott, which opposed BP’s green energy strategy. 

Elliott, which owns 5 per cent of BP, is said to be pushing for O’Neill to quickly sell off underperforming assets, including renewables, to reduce debt and pivot back to its core fossil fuels business.

Under O’Neill and Manifold, another outsider, BP may draw up plans for more radical change that ‘could mean they became more interested in accepting offers for all or parts of the business,’ said Henry Tarr, energy analyst at investment bank Berenberg.

In June, Shell dismissed media reports that takeover talks had taken place with BP. 

The statement meant that under City rules it could not make an offer for its smaller rival for six months. That deadline expires on December 26, freeing up Shell to approach BP.

It has also emerged that Shell boss Wael Sawan and his finance chief Sinead Gorman blocked a plan to buy BP this year. That led Shell’s head of deals unit to quit, the Financial Times reported.

Shell is understood to be wary of combining two of Britain’s biggest companies, but sources say it may come under pressure from ministers to renew its interest if BP is about to fall into the hands of a foreign bidder. 

‘O’Neill may have a fight on her hands to ensure BP is not sold for a song,’ said Derren Nathan at broker Hargreaves Lansdown. 

‘Investors will now be hoping she has a firm plan to shore up the balance sheet, improve profitability, and define BP’s role in the energy transition.’

Carol Howle, head of BP’s trading arm, will take charge until O’Neill arrives. 

Despite a recent rally in BP’s depressed share price, Auchincloss failed to win over investors and crucially, Manifold, who joined in October. Shell and BP declined to comment.