Executive Speaks Out: Consider Selling Own Shares Before Potential Acquisition by BP
Shell's CEO, Wael Sawan, has brushed off rumors of a potential takeover bid for BP, stating a preference for buying back shares of his own company instead. The energy giant has been tipped as a possible contender for BP following a significant drop in its rival's share price.
Sawan made these remarks to the Financial Times, adding that buying back Shell shares remains the preferred option. He stated, "We will always look at these things, but right now, buying back Shell [shares] for us continues to be absolutely the right alternative."
With Shell announcing plans to purchase an additional £2.6 billion worth of its own shares over the next three months, this marks the 14th consecutive quarter of substantial share buybacks.
Speculation about a potential Shell-BP merger has been circulating as BP's share price has seen a substantial 30%+ decrease over the past year. However, Sawan's comments signal that the focus remains on Shell's own shares rather than acquisitions.
Finance chief Sinead Gorman commented that Shell's shares were "undervalued" and still represented a good investment opportunity despite a 28% slump in first-quarter profits to £4.2 billion. Despite a drop in crude oil prices from over $80 a barrel in January to a four-year low of around $60 currently, profits surpassed analyst expectations. With more returns promised to investors, shares rose 2.1% to 2487.5p, although they remain down more than 10% since the start of April.
Despite persistent market speculation, Sawan's comments suggest that Shell prefers to channel its resources into acquiring its own undervalued shares rather than pursuing a complex merger with BP. This strategy seems to reflect an industry-wide trend, as firms like Exxon and Chevron prioritize acquisitions in specialized sectors such as shale and Guyana assets.
- Shell's CEO, Wael Sawan, has indicated a preference for buying back Shell shares instead of pursuing a takeover bid for BP.
- Finance chief Sinead Gorman believes that Shell's shares are undervalued, making them a good investment opportunity.
- Despite a drop in crude oil prices, Shell announced plans to purchase an additional £2.6 billion worth of its own shares.
- Speculation about a Shell-BP merger has been circulating, but Sawan's comments signal that the focus remains on Shell's own shares.
- Other firms like Exxon and Chevron are prioritizing acquisitions in specialized sectors such as shale and Guyana assets, suggesting an industry-wide trend towards self-reinvestment.
