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BP jumps on takeover talk home

Tuesday 14 December 2010

BP was in the takeover spotlight as leading shares rose for the fourth trading day in a row to hit a new high for the year.

The company was the biggest riser in the leading index, up 14.75p to 473.10p on talk of possible bid interest from Royal Dutch Shell, whose B shares added 28.5p to 2081.5p. More than 61m BP shares changed hands, well above recent levels. Since the Gulf of Mexico disaster BP has been seen as vulnerable to a bid, with Exxon Mobil also mentioned as a possible predator.

BP also announced the sale of oil and gas assets in Pakistan for $775m to Hong Kong listed United Energy Group. The price is higher than analysts expected, and brings the amount the company has raised in recent months to help pay for the Gulf spill to around £22bn.

Meanwhile analysts at Credit Suisse did their bit for BP, raising their target price from 515p to 585p. They said:

BP remains our top pick for long-term investors, as we think the market remains overly pessimistic on the costs of the Macondo spill. The next catalyst is the February 2011 strategy update by Bob Dudley, which should give some visibility on BP’s portfolio after Macondo. We will not have clarity on gross negligence from the Department of Justice before the second half of 2011, but two other investigations could give a verdict in the first quarter.

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