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Shell boss cautious over bidding for BP as shareholders rebel over plans to ramp up gas production
Shell’s boss has not ruled out launching an audacious takeover bid for rival BP – but said the bar to such a deal was ‘very high’.
Chief executive Wael Sawan’s comments yesterday followed fresh speculation this month that the oil giant is weighing up a bid for struggling BP.
Shell has reportedly called in advisors to work on a potential offer but it is waiting for oil prices and its competitor’s valuation to fall further before making a swoop.
Speaking at Shell’s annual general meeting, Sawan was cautious about the prospect of a deal.
When asked about a potential bid, he said: ‘The bar for mergers and acquisitions is very high.’
He said Shell’s share price makes buybacks an especially attractive way of spending money.
Takeover talk: Shell Chief exec Wael Sawan (pictured) did not rule out launching a takeover bid for rival BP – but said the bar to such a deal was ‘very high’
A deal, which would be one of the biggest in the sector, would strike a devastating blow to both BP and London’s stock market.
It comes as 116-year-old BP’s share price lags behind its peers following an ill-fated pivot towards renewable energy.
While the arch-rivals were once neck-and-neck, BP is now worth around £58billion whereas Shell sits at £147billion.
Sawan’s re-election to the board won the support of 98.7pc of shareholders at the AGM yesterday while chairman Andrew Mackenzie secured the backing of 91.4 per cent.
In contrast, BP chairman Helge Lund only received around 76 per cent at this year’s shareholder meeting and is set to step down following investor pressure.
However, Shell faced a backlash from a group of investors over its fossil fuel strategy.
Around a fifth of shareholders backed an activist resolution asking the company for more information on its liquefied natural gas (LNG) expansion and how it is compatible with climate targets.
The resolution was defeated, but the level of votes cast in favour requires the company to consult shareholders further on the issue within six months.
In his opening address, Mackenzie argued that Shell expects fossil fuel demand to stay strong for the ‘foreseeable future’.
Shell’s shares inched up 0.6 per cent, or 13.5p, to 2486.5p.
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Shell boss cautious over bidding for BP as shareholders rebel over plans to ramp up gas production
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