Abu Dhabi’s state-owned oil company reportedly recently explored a multibillion-pound bid for BP in a sign that depressed share values in London are making even the biggest British businesses takeover targets.
Abu Dhabi National Oil Company (Adnoc) considered options including purchasing BP or acquiring a large stake before deciding it was not the right fit and abandoning preliminary discussions, according to Reuters.
Adnoc and BP spoke directly in recent months and the UAE firm also sought advice from investment banks on a potential deal, although discussions did not progress far, the report added.
Shares in BP rose by more than 2% in early trading to 530.5p, valuing the company at £89.4bn.
BP has underperformed against its competitors, which investors and analysts say has made the British firm a potential takeover target amid a wave of mega-mergers in the US oil industry.
BP and Adnoc already have a number of joint ventures, including a linkup to develop gas assets in Egypt announced in February and a separate partnership last year to acquire a 50% stake in the Israeli natural gas group NewMed, although this investment is on hold.
Adnoc and BP declined to comment.
UK companies have recently attracted takeover interest because of relatively lower share values in London’s stock market, which have prompted companies including CRH and Flutter to move their listings to New York.
Shell’s chief executive, Wael Sawan, and its former boss Ben van Beurden have recently made comments suggesting the oil company may also make the jump to list across the Atlantic because US investors are “more positive” about fossil fuels.
BP confirmed Murray Auchincloss as chief executive earlier this year, succeeding Bernard Looney, who resigned last year for failing to disclose past relationships with colleagues. The company has committed to a huge share buyback programme and has said it wants to buy back $3.5bn (£2.8bn) of its shares in the first half of 2024 and at least $14bn in stock in 2024 and 2025.
Reuters said that political considerations had also surfaced as a factor in Adnoc’s decision not to proceed with a takeover. The UK government has the power to intervene in acquisitions in industries including energy under the National Security and Investment Act, which came into force in 2022.
The UK government also recently introduced legislation to prevent UK newspapers being bought by foreign state-owned companies after Redbird IMI, a partnership backed by Sheikh Mansour bin Zayed al-Nahyan, the UAE’s vice-president, and the US investment firm RedBird Capital Partners, tried to buy the Daily Telegraph newspaper. However this legislation is intended just to apply to newspaper groups.