BP PLC (NYSE: BP), which has been focusing more on renewables at the expense its oil and gas core operations, saw its share price fall sharply over the last 12 months.
The energy giant, BP, has committed to reducing its spending on renewables in an effort to restore investor confidence. However the share price damage has made BP a candidate for a possible takeover.
“Certainly, BP could be a takeover target – there’s no doubt,” Maurizio Caulli told CNBC, a Quilter-Cheviot analyst in a CNBC interview.
BP’s shares have fallen by more than 30 percent from their 52-week peak.
Shell could approach BP and make a purchase offer.
The continued weakness of BP’s stock has prompted speculations that Shell, a peer company in the energy sector, would be interested in acquiring BP to increase its presence in global markets.
Allen Good, Morningstar’s Director of Equity Research, believes that a possible transaction between Shell and BP will likely result in a merger, rather than a full acquisition.
Carulli, from Quilter Cheviot, said in an interview with CNBC that a possible agreement between both companies would likely raise competition concerns.
He made his remarks just weeks after the activist investor Elliott Management revealed a stake of 5.0% in BP.
Chevron is a possible suitor of BP
Another potential suitor for BP could be the Houston-headquartered Chevron Corp, particularly since the fate of its $53 billion Hess deal hangs in the balance amidst legal uncertainty.
If Hess, the US-based firm does not close their transaction with BP in London, BP may be able to offer a viable alternative that will allow it to fulfill its global expansion commitment.
Michele Della Vigna, Goldman Sachs’ analyst in a CNBC interview noted that such a deal would make sense because BP is “the most US-exposed oil major of them all. Even more so than Exxon or Chevron.”
BP generates approximately 40% of its revenue from the US.
Does it make sense to invest in BP in 2025?
BP used to be the UK’s most celebrated oil company.
It reported in February that it had earned $1.169 Billion for the fourth quarter of its business, falling short of experts’ expectations. They expected $1.2 Billion and a decline by 61% on an annual basis.
BP attributed the disappointing results to a “decrease in fuel and refining margins due to seasonality, lower volumes of customers, and higher turnaround impact.”
Analysts on Wall Street still like the stock despite its continued weakness.
BP’s shares are still rated “overweight”, with a mean price target of $36, indicating a potential gain of over 30%.
Plus, BP’s stock pays a generous dividend yield of 6,90% which makes it more appealing to buy at its current price.
The post BP Is ‘definitely a Takeover Target’: Market Expert Says may be updated as new information becomes available
