Will Shell acquire BP? The intrigue around a potential merger has garnered growing market interest in recent weeks. A June 25 article in the Wall Street Journal stated Shell is “in early talks to acquire BP,” citing “people familiar with the matter.” According to the authors Ben Dummett, Lauren Thomas and Jenny Strasburg, “BP is considering the approach carefully.” However, the authors pointed out that the discussions “are moving slowly,” and that “a tie-up is far from certain.”
Shell issued an official statement a day later, denying any ongoing merger discussions. “In response to recent media speculation Shell wishes to clarify that it has not been actively considering making an offer for BP and confirms it has not made an approach to, and no talks have taken place with, BP with regards to a possible offer.” Shell added “we remain focused on delivering more value with less emissions through performance, discipline and simplification.”
On June 26, the Wall Street Journal published an update online, acknowledging that Shell had said the (WSJ) report “is further market speculation. No talks are taking place.”
BP’s share price rose nearly 10 percent upon the news of a potential merger, but almost all the gains reversed after Shell issued its statement. Shell CEO Wael Sawan has repeatedly highlighted that the company would rather buy back Shell stocks than make a major acquisition.
I contacted London-based lead author of the WSJ article Dummett, who replied via email, “We still stand by our story. I can’t comment on what may or may not have happened between the companies following publication of our story,” while “respectfully declining” my request to interview him on behalf of AAPG.
Shell’s move to make an official statement is quite unusual. Typically, the speculated acquirers tend to either make no comment or speak using vague terms, for example: “We always evaluate potential acquisition targets.”
Based on Code 2.8 of the London Stock Exchange Merger and Acquisitions, once a potential acquirer makes a public statement about not taking over a target company, it is prohibited from undertaking the deal for at least the next six months, unless:
- The board of the target company agrees to waive the restriction.
- There is a third party attempting to acquire the potential target.
- There is a material change of circumstances.
BP’s Previous Potential Mergers
BP, once one of the three leading horses alongside ExxonMobil and Shell, has been hit by several missteps ranging from costly safety disasters (the Macondo oil spill in the Gulf of Mexico) to moving too aggressively on renewable energy. It was also forced to withdraw from its significant holdings of Russian company Rosneft, which further shrank the company.
The United Arabe Emirates’ Abu Dhabi National Oil Company was rumored to be a potential acquirer of BP in recent years, though Shell has been by far the most consistent speculated buyer. Chevron has been suggested as a potential acquirer, Chevron will be busy digesting Hess after winning the arbitration against ExxonMobil and completing the merger recently; it will be unlikely to be a buyer for BP any time soon against ExxonMobil and will be busy digesting newly acquired Hess. ExxonMobil and TotalEnergies have also been mentioned as potential buyers, though to a much lesser extent.
Potential Impact
So what would a merger of BP and Shell actually look like?
A merger between Shell and BP would be the biggest since Exxon acquired Mobil in 1999. A combined Shell-BP would have a market cap of roughly $300 billion, making it the second largest international oil company after ExxonMobil. As of mid-July 2025, Shell’s market cap stands at $213 billion, while BP’s is at $85 billion. ExxonMobil’s market cap is $491 billion; Chevron’s market cap is $263 billion; and TotalEnergies’ is $139 billion.
If we envision a tie-up between the U.K.’s two biggest oil companies, it would:
- Create a company producing almost 5 million barrels of oil equivalent per day, which is higher than the production of ExxonMobil or Chevron
- Extend Shell’s already leading LNG business for what is considered a major growth sector over the next 10–15 years
- Expand Shell’s portfolio in deepwater, especially in the Gulf of Mexico (aka Gulf of America). Shell might face fewer approval problems with the UK government, although in key international positions, Shell might be forced to sell some assets (such as in the Gulf of Mexico), so as not to have too dominating a position.
BP will provide clear synergy to augment Shell’s portfolio in several areas, including U.S. onshore, the U.S. Deepwater Gulf of Mexico (Gulf of America), Australia, UAE, Egypt, Brazil and marketing and downstream positions in key emerging markets such as China and India. The combination will also help fill several upstream portfolio gaps for Shell, including Azerbaijan, India and Indonesia. Recent signings of discovered volume growth opportunities in Iraq and Libya will be welcome additions for Shell, as both are trying to regrow their upstream portfolios.
One of the biggest boosts for Shell would be BP’s significant trading business for refined products, and especially LNG. Shell is already the world’s largest LNG portfolio player, with 68 million tonnes per annum. According to S&P Global, BP has a portfolio that could deliver 30 million tonnes per annum of LNG by 2030.
If Shell were to take over BP, it will likely need to get government approval from a number of key countries with significant business – not just the UK government. However, other than some token divestments, I do not see any particular country presenting a major legislative barrier.
What’s Next?
The key to any merger and acquisition deal is valuation. Would Shell need to pay a significant amount of premium to BP to enable the transaction? If a no-premium deal could be negotiated by the two companies, or encouraged by the British government, the combination will likely be welcomed by Shell shareholders. But will activist investors such as Elliott be happy with a no-premium transaction?
The latest news from London is that the BP just hired Simon Henry, former Shell chief financial officer, to join its board. This might be just an incidental appointment, but the Shell veteran certainly knows the company’s key leaders well.
The quickest synergy would be cost savings from asset proximity and workforce reduction. According to their filings, Shell has 96,000 employees and BP has 100,500 employees worldwide as of end 2024. A 10-percent workforce reduction for the combined company could mean some 20,000 people lose their jobs; though industry seems to very much welcome experienced employees from these industry-leading majors.