Shell could buy BP for just £5 a share

worldtraveller

One of Britain’s oldest oil companies BP could be about to be sold to its biggest rival for a fiver per share.

The rumoured deal, if realised, would complete one of the most ignominious falls for the once great Persian Oil company that powered Britain’s Navy to victory during the First World War.

BP is now a sitting duck after the Gulf of Mexico disaster, Russian sanctions and the falling oil price combined to drive down the share price to £4.25.

The Telegraph

Generali

It would be possible, in theory, for Shell to buy BP. Total cost would be around £100,000,000,000 and Shell's value is about £141,000,000,000.

Getting it past regulators would be impossible or as near as dammit.

CLAPTON

why would they wish to do this?

Generali

CLAPTON wrote: »

why would they wish to do this?

Ordinarily you buy a company to make a bigger company.

Managers of bigger companies earn more more.

As for the share holders? Meh, who cares.

puppey

bigger isn't always better as well, many of the mega mergers in the tech world haven't gone well, and then they try to split the company up after.

Generali

puppey wrote: »

bigger isn't always better as well, many of the mega mergers in the tech world haven't gone well, and then they try to split the company up after.

Indeed. There is plenty of evidence to show that takeovers usually destroy value.

Directors of larger companies earn more than Directors of small companies hence the enthusiasm for making companies larger amongst Directors.

Thrugelmir

Who would want to buy an oil a company at the current time?

Shell will shutting down North Sea rigs if the price remains this low. Not helpful to their own financial performance.

wotsthat

Thrugelmir wrote: »

Who would want to buy an oil a company at the current time?

Me. I topped up with a few shares of BP last week.

Thrugelmir

wotsthat wrote: »

Me. I topped up with a few shares of BP last week.

Why did you think that now is a good time to buy? Are you expecting oil price to rise soon?

ruggedtoast

Oil prices are low because America has commanded OPEC to lower the price of oil to hurt Moscow.

At some point they will no longer have that foreign policy objective and prices will rise again.

The Americans also have their own nascent fracking industry to think about and there is an election on the way. Whether the next president is Democrat or GOP he / she will start their incumbency with palms well greased by the petrochemical industries and prices will be going up, don't worry about that.

Thrugelmir

ruggedtoast wrote: »

Oil prices are low because America has commanded OPEC to lower the price of oil to hurt Moscow.

At some point they will no longer have that foreign policy objective and prices will rise again.

The Americans also have their own nascent fracking industry to think about and there is an election on the way. Whether the next president is Democrat or GOP he / she will start their incumbency with palms well greased by the petrochemical industries and prices will be going up, don't worry about that.

Majority of fracking operation in US is only economic at $70 to $90 a barrel. Saudi's are squeezing US operations not the Russians. Both US and Mexico have off shore reserves that can be tapped at far lower production cost. So the story has further to run.