Shell says it has 'no intention' of making an offer for rival BP

(Sharecast News) - Oil giant Shell said on Thursday that it has "no intention" of making an offer for rival BP. In a brief statement in response to media speculation on Wednesday, the company said it has not been actively considering making an offer for BP, it has not made an approach and no talks have taken place with regards to a possible offer.

"Shell confirms it has no intention of making an offer for BP," it said.

"We remain focused on delivering more value with less emissions through performance, discipline and simplification."

Under the takeover code, Shell can't make a bid for BP for six months, unless it has the agreement of the board, a third party announces a firm intention to make an offer for BP or if there has been a material change of circumstances as determined by the Takeover Panel.

On Wednesday, the Wall Street Journal cited people familiar with the matter as saying that Shell was holding early-stage talks to buy its rival in what would be the largest oil deal in a generation.

Sources told the WSJ that talks between company representatives were active and that BP was considering the approach carefully.

Derren Nathan, head of equity research at Hargreaves Lansdown, said: "Structurally lower oil prices are causing the majors to look at their options, but given Shell's superior asset quality and balance sheet, any combination may be difficult for its shareholders to stomach.

"Cherry picking some flagship assets could be another option, but that's unlikely to satisfy BP investors. For now, the focus for Shell is likely to remain on buying back its own shares."

Kathleen Brooks, research director at XTB, said: "While the speculation about Shell's purchase of BP will die down, there is some logic in the oil majors bonding together. The oil price could remain suppressed for some time, as there is ample supply in the market, for both this year and next, according to the IEA. This is a tricky period for the oil majors, and there could be strength in combining reserves."