BP draws takeover interest from UAE oil giant

Adnoc’s interest is likely to reignite speculation that BP, which is worth £88bn, could be acquired

The UAE’s state oil company is said to have explored a multibillion pound takeover of BP in a sign that depressed stock market valuations in the UK have made even the biggest companies bid targets.
The Abu Dhabi National Oil Company (Adnoc) and BP spoke directly in recent months and Adnoc also sought advice from investment banks on a potential deal, sources told Reuters.
Deliberations did not get further than preliminary discussions after Adnoc concluded BP was not the right fit for its strategy. The company was also concerned about the politics of any bid.
A takeover of BP would almost certainly draw government involvement because of its significance to Britain. As well as playing a crucial role in the country’s energy industry, it is a significant taxpayer and a cornerstone of the London Stock Exchange.
Scrutiny of UAE investments in Britain has also been heightened by the recent Abu Dhabi-backed takeover bid for the Telegraph.
State media company IMI provided the bulk of the funding for joint venture RedBird IMI’s Telegraph offer.
The deal, which was struck through a loan agreement with the Barclay family, has effectively been blocked after ministers unveiled new laws to block state ownership of British newspapers.
Adnoc is run by Dr Sultan Ahmed Al Jaber who is also the chairman of IMI.
The oil industry has seen a wave of dealmaking over the last year as a global shift to net zero has prompted consolidation.
ExxonMobil last year struck a $60bn deal to buy Pioneer Natural Resources, while rival Chevron agreed to buy Hess Corporation for $60bn.
The takeovers sparked speculation that BP could also be a target. However, BP chief executive Murray Auchincloss dismissed this last October, saying: “I don’t feel vulnerable.”
Adnoc’s interest is likely to reignite speculation that BP, which is worth £88bn, could be acquired.
British companies across all industries have attracted intense takeover interest because of depressed values on London’s stock market.
BP’s share price values it at 7.54 its earnings, compared with 12.98 for US rival Exxon Mobil.
Earlier this week the chief executive of Shell suggested his company could quit the London market because it was “massively undervalued” by investors.
BP has long standing ties to the Adnoc. The two companies have worked together in the Middle East for decades and they announced a new joint venture focused on production from two massive Egyptian gas fields in February.  
The UAE oil company is also supporting BP’s hydrogen production project in Teesside. Last year the pair teamed up on a $2bn joint bid to buy 50pc of Israeli gas company NewMed, though the deal was suspended last month in light of the conflict in Gaza.
BP and declined to comment. Adnoc has been approached.