Shell Denies Acquisition Talks Amidst BP Merger Speculation

In late June 2025, reports emerged suggesting that Shell was in early-stage discussions to acquire BP. The Wall Street Journal, citing unnamed sources, claimed that Shell was considering a takeover of its British rival. Shell promptly denied these claims, stating, "This is further market speculation. No talks are taking place." (reuters.com)

Following the initial report, BP's shares experienced a temporary surge of nearly 10%. (axios.com) Analysts suggest that BP's underperformance and relatively low valuation may continue to fuel acquisition rumors, even in the absence of confirmed talks. Rob Thummel, a senior portfolio manager at Tortoise Capital, noted that a merger could enhance the valuation and free cash flow of the combined entity, making the idea attractive. (axios.com)

BP has faced financial challenges in recent years. In the first quarter of 2025, the company reported an underlying replacement cost profit of $1.4 billion, a significant decline from previous periods. The company also announced a $750 million share buyback program for the quarter. (bp.com) In February 2025, BP declared that it would cut renewable energy investments and focus on increasing oil and gas production, planning to invest around 20% more in fossil fuels, reaching $10 billion per year, while decreasing planned funding for renewables by more than £5 billion. (en.wikipedia.org)

Shell has emphasized its commitment to enhancing company value through improved performance, financial discipline, and operational simplification. The company has consistently downplayed the idea of a BP acquisition, with CEO Wael Sawan arguing that repurchasing Shell’s shares offers better value for shareholders than pursuing a massive merger. (ft.com)

A potential merger between Shell and BP would likely face significant regulatory scrutiny. The European Commission’s competition directorate would likely demand divestitures exceeding 15% of downstream operations, potentially including Shell’s German refineries or BP’s UK retail network. The U.S. Federal Trade Commission could target Gulf of Mexico operations where both companies hold top-five lease positions. Historical precedents suggest 12-18 month approval processes with $5-7 billion in forced asset sales—a material deterrent given Shell’s capital discipline focus. (ft.com)

Speculation about a potential merger between Shell and BP is not new. In April 2025, reports suggested that BP's depressed share price had reignited speculation of a prospective tie-up with Shell. Analysts noted that while the rumors have some merit, a prospective deal would likely trigger antitrust concerns. Additionally, Shell's commitment to capital discipline under CEO Wael Sawan was seen as a potential obstacle to such a merger. (cnbc.com)

The ongoing speculation surrounding a potential Shell-BP merger underscores the dynamic nature of the energy sector. While Shell has firmly denied any acquisition talks, BP's financial performance and strategic shifts continue to make it a subject of market interest. Any future developments will likely depend on both companies' strategic decisions and the evolving regulatory landscape.