Shell today reiterated it is not considering a bid for its UK peer BP, following up its denial on Wednesday, 25 June, and pointed to a London listing rule that imposes restrictions on making an offer.
The denials were prompted by a report in the Wall Street Journal that Shell was in early-stage discussions about a possible acquisition of BP. That in turn followed a Bloomberg article in May that said Shell had been evaluating the feasibility of acquiring its rival.
Today Shell explicitly pointed to Rule 2.8 of the UK City Code on Takeovers and Mergers, which imposes restrictions on a party that has said it does not intend to make an offer for a company that is subject to the code. Usually once a party has said it does not intend to bid for a company subject to the code, that party cannot then make a takeover approach for a period of six months.
Shell did note, however, that it has the right to set the Rule 2.8 restrictions aside under certain circumstances, such as if a third party announces a firm intention to make an offer for BP.
Shell's management team has repeatedly emphasised that the company sees better value in its own shares, which it believes are rated too low by investors.
"Everything we do has to rank against… the shares and the buying back of the shares," chief financial officer Sinead Gorman noted on the company's first-quarter earnings call in May.
