Shell Plc clarified on Wednesday that it is not in talks to take over rival BP.
Shell’s comments came after a Wall Street Journal report cited unnamed sources saying the US company was in early discussions to acquire the British energy firm.
“This is further market speculation. No talks are taking place,” a Shell spokesperson said. “As we have said many times before we are sharply focused on capturing the value in Shell through continuing to focus on performance, discipline and simplification.”
Shares of BP surged as much as 10% in New York earlier on Wednesday on the media report. Shares of the company erased most of those gains to trade 1.2% higher as of 12:44 PM local time.
BP has been under intense pressure after years of poor performance and the intervention of activist shareholder Elliott Investment Management.
Speculation has been growing that the embattled company would become a takeover target, although BP’s size and complexity would make any deal very challenging.
Bloomberg reported in May that Shell had been studying the merits of a takeover, but was waiting for further stock and oil price declines before deciding whether to pursue a bid.
If Shell were to acquire BP, it would be among the largest deals in European history, creating for the first time an oil major that could challenge industry leaders Exxon Mobil Corp. and Chevron Corp. The two companies combined would have upstream production of nearly 5 million barrels of oil equivalent a day and a dominant position in the global market for liquefied natural gas, reported Bloomberg.
A deal would also be costly, with some analysts predicting that Shell would have to pay a premium of about 20% to BP’s £58 billion ($79 billion) market capitalization. It could also create significant competition concerns, giving the merged company a large share of fuel retail markets in some countries.
