Shell is studying merits of BP deal as rival’s stock slumps

London: Shell Plc is working with advisers to evaluate a potential acquisition of BP Plc, though it’s waiting for further stock and oil price declines before deciding whether to pursue a bid, according to people familiar with the matter, Bloomberg reported.

The oil major has been more seriously discussing the feasibility and merits of a BP takeover with its advisers in recent weeks, the people said, asking not be identified since the information is private.

Any final decision will likely depend on whether BP stock continues to slide, the people said. Shares of BP have already lost nearly a third of their value in the last 12 months as a turnaround plan has fallen flat with investors and oil prices tumbled. Shell may also wait for BP to reach out or for another suitor to make a first move, and its current work could help it get prepared for such a scenario, some of the people said.

Deliberations are in the early stages and Shell may opt to focus on share buybacks and bolt-on acquisitions rather than a megamerger, they said. Other large energy companies have also been analyzing whether they would want to bid for BP, the people said. “As we have said many times before, we are sharply focused on capturing the value in Shell through continuing to focus on performance, discipline and simplification,” a spokesperson for Shell said in an emailed statement. A representative for BP declined to comment.

A successful combination of Shell and BP would be one of the oil industry’s largest-ever takeovers, bringing together the iconic British majors in a deal that’s been discussed on and off for decades. The companies were once close rivals — with a similar size, reach and global clout — but their paths have diverged in recent years. Shell’s stock is down about 13% in London trading over the last 12 months, giving the company a market value of £149 billion . That’s more than double the £56 billion mcap of BP.