Shell Plotting a BP Takeover? The Oil Megadeal That Could Reshape the Energy World

BP (NYSE:BP) jumped nearly 2.7% at 10.18am todaywhile its home exchange was on holiday. Why? Because Shell (NYSE:SHEL) might finally be making a move that’s been whispered about for decades: buying its long-time British rival. Bloomberg reports that Shell has been quietly working with advisers, exploring the mechanics of a takeoverbut it’s holding its fire for now, waiting to see if BP’s stock and crude prices drop further. If it happens, this would be one of the biggest oil mergers in historyreshaping the global energy map overnight.

BP desperately needs a spark. Shares have cratered 25.4% over the past year as the market lost faith in its net-zero pivot. New CEO Murray Auchincloss is trying to reverse coursecutting buybacks, re-embracing oil, and promising asset sales. But investors want more. Activist heavyweight Elliott Investment Management just revealed a 5% stake and is pushing BP to make bold, structural moves. That’s added fuel to the M&A chatterand suddenly, Shell’s interest doesn’t look so far-fetched.

Still, nothing’s set in stone. Shell could just keep doing what it’s already doingbuying back shares and cherry-picking bolt-on deals. We are sharply focused on capturing the value in Shell through continuing to focus on performance, discipline and simplification, a company spokesperson said. Translation: we’re in control, but we’re watching everything. Behind the scenes, other oil majors are also said to be eyeing BP. If this turns into a bidding war, things could get wildfast.

This article first appeared on GuruFocus.