Shell doesn't need to bid for BP - the appeal of a takeover can't beat its share buy-backs

The stars never aligned for a grand merger of BP and Shell over the decades, despite the deal being touted regularly as inevitable at some point.

- Nils Pratley

How about now? BP has been torturing itself, its shareholders and the outside world with its on-off green transition plans and its ponderous strategic "re-sets". Not even a hard kick from the activist boot of Elliott Management has enlivened an underperforming share price. In the background, the oil price is on the slide, which is traditionally when boardroom thoughts turn to deal-making in search of easy cost-cutting wins.

Over the weekend Bloomberg reported that Shell is studying the merits of a bid for BP, albeit with the important qualification that the would-be target's share price may have to fall further to make the arithmetic stack up. Naturally it would have to be a takeover, rather than a merger of equals these days because Shell's stock market value of £146bn towers over BP's £56bn. In the game of fantasy deal-making, one can imagine how a pitch would go: it would be sold as a final opportunity, in the oil industry's sunset years (we hope), to build a European mega-cap firm to rival the US giants ExxonMobil and Chevron.