Reports and rumors have intensified this year around the idea that British energy company BP has become a takeover target—especially by rival Shell—in what could be the biggest oil sector deal since the Exxon-Mobil merger in 1999.
Five years of contradictory strategic shifts, along with the sudden departure of the architect behind BP’s “green” plan, Bernard Looney, have left investors skeptical about the company’s direction—if not its very ability to convince markets and shareholders that it’s a stock worth holding.
The latest wave of speculation just days ago reignited talk of a potential takeover by Shell, the UK-based competitor. While Shell officially denied the rumors, it did not completely shut the door on making an offer at a later time, should material changes occur in current circumstances.
However, Shell—or any company eyeing a takeover of BP—would face a massive deal and numerous challenges, including BP’s higher debt levels compared to peers, and potential regulatory hurdles across several jurisdictions, including the UK.
How Did BP Become the Weakest Link?
Talk of a BP-Shell merger has long circulated in the market. For years, BP’s share performance has lagged behind its peers, and the company’s repeated strategic pivots—two in the last five years—have done little to restore investor confidence or convince markets of its ability to generate real value.
In 2020, then-CEO Bernard Looney launched a strategy to shift BP from an “international oil company” to an “integrated energy company,” by reducing oil and gas production and ramping up investment in low-carbon energy. But the strategy—branded as “performing while transforming”—failed to win over investors, as returns from renewables remained weak and markets were unimpressed by the move away from the company’s most profitable activities (oil and gas) in favor of costly, less viable investments.
Then came 2022 and a global energy crisis, which drove major energy companies to refocus on delivering reliable and affordable oil and gas supplies. Looney began talking about solving the “energy trilemma”: cost, security, and sustainability. But in September 2023, Looney abruptly resigned following revelations of undisclosed personal relationships in the workplace.
After his departure, CFO Murray Auchincloss took over as interim leader before being formally appointed CEO in 2024.
Resetting the Course
In early 2025, Auchincloss announced a sweeping reset of BP’s strategy, refocusing on oil and gas and scaling back renewable investments.
The shift was believed to be partly driven by the activist hedge fund Elliott, which acquired nearly 5% of BP shares. Elliott is known for applying heavy pressure to enact rapid and fundamental changes at companies it invests in and has called on BP to reduce debt and prioritize shareholder returns.
But hopes that the new strategy would revive BP’s stock were quickly dashed. A negative turn in the market—triggered by trade wars and tariff disputes that pushed Brent crude prices down to near $60 in April and May—erased any short-term gains in the stock.
In Q1 2025, BP reported the weakest financial results among the major oil companies, and was forced to slash its share buyback program by $1 billion due to falling cash flows and rising net debt, further fueling speculation about a possible merger with Shell.
What’s Next?
Speculation resurfaced in the final week of June following a report in the Wall Street Journal that Shell had entered early-stage talks to acquire BP.
But a day later, Shell issued a statement confirming that it is not currently considering any offer to acquire BP, and that no approaches or discussions between the two parties have taken place.
Shell stated: “In response to recent speculation, Shell confirms it is not actively considering an offer to acquire BP, and has neither made any approach nor entered into any discussions with BP regarding such a matter.”
Under UK market rules, Shell’s declaration of non-intent now bars it from making another approach within the next six months, unless there is a material change in circumstances or a third party submits a formal bid.
Still, the door wasn’t fully closed. The statement also noted that Shell may reconsider the matter “should there be a material change in circumstances” or if a third party makes a formal offer to acquire BP.
Is There Truth Behind the Rumors?
Dan Coatsworth, investment analyst at AJ Bell, told Yahoo Finance: “The persistence of these rumors could suggest there’s some truth behind them—whether it’s Shell or another party eyeing the British oil and gas producer.”
However, any attempt to acquire BP would face major regulatory challenges in several markets. Any suitor would need to weigh the merger’s potential synergies against BP’s debt load, and possibly consider selling off assets to secure regulatory approvals.
