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Shell chief executive Wael Sawan and his top lieutenant quashed an internal proposal to buy rival BP this year, after which the company’s head of mergers and acquisitions left the business.
The M&A team, led by Greg Gut, argued in the early part of 2025 that BP’s plunging share price and management turmoil presented an opportunity for Shell to solve its growth challenges and pushed for a deal, according to several people familiar with the situation.
While Sir Andrew Mackenzie, Shell’s chair, was said to be interested in Gut’s pitch, according to two people familiar with the matter, Sawan and his chief financial officer Sinead Gorman felt that the challenge of combining two of Britain’s biggest companies would derail their strategy.
Sawan’s opposition suggests that Shell was unlikely to pursue a deal for BP when restrictions lift on its ability to bid on December 26, said a person familiar with the situation.
In June, Shell responded to press reports by saying it was not interested in a deal for BP and that no talks had taken place between the two companies. Such a statement prevented it from making an offer for its rival for six months, under UK takeover rules.
By the time of the no-bid statement Gut had already left Shell, with his failure to win over Sawan and Gorman ultimately paving the way for his exit, according to people familiar with the matter.
“There was a moment to buy BP, when the chair had left and the chief executive was wobbly, [but] that moment has passed,” said one oil and gas investor briefed on the situation.
After the possible deal was pitched, Sawan in May decided he would rather focus on improving shareholder returns than a bid for a rival then valued at about £56bn.
BP chair Helge Lund was replaced by Albert Manifold in July, and its shares have soared by about a third from a low of 331p earlier in the year.
Gut’s position as executive vice-president for corporate strategy, M&A and new business development has been split between Mohammed Hamid, who added global strategy to his role as head of investor relations, and Walid Hadi, the former Shell country chair in Oman who became head of acquisitions, divestments and new business development in July.
The interest in BP came after growing internal questions about Shell’s long-term growth strategy. Sawan, who became chief executive in 2023, has focused on shoring up Shell’s balance sheet, cutting costs and ensuring that it can consistently return 40-50 per cent of its operating cash flow to shareholders.
He has set modest targets for the next five years to keep Shell’s oil production flat at 1.4mn barrels a day, and grow its gas production by 1 per cent each year. But in the longer term, analysts at energy consultancy Wood Mackenzie expect Shell’s oil and gas production to plunge 55 per cent by 2040 unless it can replenish its resource base.
With oil prices expected to fall further in the first half of next year, Sawan has indicated that he is interested in making small acquisitions to top up Shell’s portfolio, but he also ruled out any large-scale deals that would impact the consistency of the company’s shareholder payouts.
One person familiar with the internal debate, however, said Shell would struggle to find the scale of oil and gas reserves it needed through exploration and small acquisitions, and that it was likely to be outcompeted on acquisitions by ExxonMobil and Chevron, whose shares trade on higher valuations.
Shell told the Financial Times it had “previously made a clear statement” on its lack of interest in BP, and had “nothing to add to it”.
BP endured a difficult start to the year when it was forced to ditch its plan to reinvent itself as a green energy business and pivot back to oil and gas. Chief executive Murray Auchincloss has also faced intense pressure from activist investor Elliott Management to shake up the business and improve shareholder returns.
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