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BP oil spill: BP could be bid target as US woes send shares sliding

Daily Telegraph: Even gushing takeover speculation could not support the share price of oil giant BP which closed down a further 26p yesterday to 365.6p – its lowest level since 1997.

By Helia Ebrahimi
Published: 6:00AM BST 11 Jun 2010

Analysts believe BP’s crash in value has now made it vulnerable to an approach with PetroChina touted as the most likely bidder. Other would be poachers include Royal Dutch Shell and Exxon Mobil. Both are seen as aggressive and could seize the opportunity to snap-up global oil and gas assets at a knockdown price.

However, BP’s shareholders are likely to be the biggest stumbling block to any deal. Despite seeing the value of their investment crashing 44pc in just two months most are long term holders of the stock and reluctant to sell at a massive discount.

However, BP’s forthcoming decision on whether or not to pay its dividend is likely to prove crucial in retaining their loyalty. If the company bows to US political pressure and cuts or “waives the payment” shareholders might find a takeover or merger more palatable.

PetroChina, which has a $60bn war chest for acquisitions, needs to bolster its overseas reserves to feed China’s rapidly growing demand for oil. Standard Chartered Bank yesterday suggested a merger between BP, with a stock market value of £68.7bn, and PetroChina could make sense for both companies. However, a major hurdle would be US regulators who would be unlikely to condone a Chinese company becoming the biggest offshore oil producer in the Gulf of Mexico.

Royal Dutch Shell may also be deemed unsuitable on foreign ownership grounds and overlapping assets could force sales. Given President Obama is wrapping himself in the US flag it could be Exxon Mobil, the world’s largest quoted oil and gas company, has an advantage.

Robert Talbut, chief investment officer at Royal London Asset Management which has a stake in BP, said there was irrational short term selling in the company and that he would not welcome a take-over. “BP assets are grossly undervalued at the moment,” he said.

However, Christophe de Margerie chief executive of French energy group Total dismissed takeover talk as unethical, saying: “Frankly, today, to dare to speak of any action on BP for me is really unacceptable.”

Speaking ahead of the International Economic Forum of the Americas in Canada Mr de Margerie also warned the oil and gas industry to be prepared for an onslaught of government and public scrutiny following the BP spill. BP, whose shares dropped 12pc at one stage in London yesterday said the clean-up and containment measures so far have cost it $1.43bn.


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