Shares of British Petroleum (BP) are up 8% on reports the energy company is in early stage talks to be acquired by oil major Shell (SHEL).
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The Wall Street Journal was the first to report on the talks between BP and Shell, which the newspaper says are active and ongoing, though a deal is far from certain. The talks are progressing slowly, according to the Journal’s report. BP is currently valued at just under $85 billion.
This is the latest example of consolidation in the energy sector, which has been on the rise since oil prices spiked in 2022 after Russia invaded Ukraine, leaving oil and gas companies flush with cash. Other mergers and acquisitions in recent years include Chevron’s (CVX) $53 billion purchase of Hess Corp. (HES) that is ongoing, and Occidental Petroleum’s $12 billion acquisition of CrownRock that was completed in 2024.
Mega-Deal
A formal deal between BP and Shell has not yet been announced, and any purchase of BP will be subject to regulatory approval in several jurisdictions. Given the early stage of the negotiations, potential terms of any deal have not been made public and a formal merger announcement is not certain at this point.
However, if a deal does materializes, it is likely that the price tag for BP will exceed $85 billion, potentially making it one of the largest acquisitions in history and a mega-deal that could surpass the $60 billion merger that created ExxonMobil (XOM) back in 1999.
Is BP Stock a Buy?
The stock of BP has a consensus Hold rating among 12 Wall Street analysts. That rating is based on three Buy, eight Hold, and one Sell recommendations issued in the last three months. The average BP price target of $30.56 implies 0.97% downside risk from current levels.
