Shell Dismisses Rumors of BP Acquisition Amid Shareholder Speculation

In late June 2025, reports emerged suggesting that Shell was in early-stage discussions to acquire BP, potentially creating one of the largest entities in the oil and gas industry. The Wall Street Journal cited unnamed sources indicating that Shell was considering a takeover of BP. These reports led to a significant surge in BP's share price, reflecting market anticipation of a possible merger.

However, on June 26, 2025, Shell issued a formal statement categorically denying any such talks, stating, "No talks are taking place." This denial was made under Rule 2.8 of the UK City Code on Takeovers and Mergers, legally restricting Shell from making an offer for BP for the next six months, unless specific conditions are met.

The UK City Code on Takeovers and Mergers is a binding set of rules that apply to listed companies in the United Kingdom, such as those trading on the London Stock Exchange. The code is designed principally to ensure that shareholders are treated fairly and are not denied an opportunity to decide on the merits of a takeover and that shareholders of the same class are afforded equivalent treatment by an offeror.

BP has been under intense shareholder pressure in recent months, especially from activist investor Elliott Investment Management, which has been pushing for major strategic changes amid years of underperformance. BP's attempt to turn an oil company into a renewable company was "definitely a huge error," said Paul Sankey, lead analyst at Sankey Research. "It's two very different costs of capital and they should have never gone near to it."

Shell's outright denial of merger talks with BP reflects its focus on capital discipline and shareholder returns. Shell CEO Wael Sawan's May 2025 statement that "the bar is very high for acquisitions" reflects a fundamental strategic pivot toward capital discipline. Rather than pursuing transformative mergers and acquisitions, Shell prioritizes $15 billion in annual shareholder returns through buybacks and dividends—a program consuming 40% of operating cash flow.

The rapid dissemination of merger rumors and Shell's prompt denial not only influenced BP's share price but also highlighted the complexities and regulatory challenges inherent in potential mega-mergers within the oil and gas industry. While market dynamics and company valuations continue to fuel such speculations, regulatory frameworks and strategic considerations play crucial roles in determining the feasibility of such mega-mergers.