If Exxon bids for BP, Obama won't say no | india | Hindustan Times
Today in New Delhi, India
Jan 24, 2017-Tuesday
New Delhi
  • Humidity
  • Wind

If Exxon bids for BP, Obama won't say no

india Updated: Jul 12, 2010 23:33 IST
Highlight Story

BP was at the centre of fresh takeover speculation after weekend reports suggested the Obama administration has told ExxonMobil — the world's largest oil firm — that it would not stand in the way of a takeover bid for the stricken British rival.

Before the Gulf of Mexico oil spill BP was UK's biggest company with a stock market value of £121 billion. Since then more than £50 billion has been wiped off its share value and potential bidders are rumoured to be circling to take advantage of its weakened state.

Oil industry sources were quoted as saying that Exxon had been given a green light by the US government to take a look" at BP. A merger would create a group with a stock market value of $400 billion (£265 billion). Both firms refused to comment.

BP Chief Executive, Tony Hayward, is well aware of the threat of a hostile bid and last week held a series of meetings with potential friendly" investors, including the Kuwait Investment Office. A big strategic investor would make it harder for the likes of Exxon or China's National Offshore Oil Company to win control in a hostile takeover bid.

The Kuwaitis already have a 1.75 per cent stake, but BP would like it to increase that to 10 per cent. Hayward is also understood to have met with another sovereign wealth fund, the Abu Dhabi Investment Authority.

The cost of the spill to BP has already past $3.1 billion (£2 billion), and the company has pledged some of its assets as security to the US government while it builds up a promised $20 billion compensation fund. Analysts at Goldman Sachs estimate the final bill for the disaster caused by the explosion on the Deepwater Horizon rig could run to $70 billion.

BP has already began talks with rivals about selling off assets to help bolster its financial position. CNOOC is interested in buying the Argentinian gas businesses partly owned by BP. The UK oil firm's joint Russian venture TNK-BP has also opened talks about buying assets outside Russia.

Apache Corporation, the US's largest independent oil group, was named as being in exclusive talks to buy investments worth $12 billion from BP, including the stake in Alaska's Prudhoe Bay, the largest oil field in North America.

We've said we're going to be divesting about $10 billion over the next 12 months as a result of the spill, but we have no comment on specific deals," said a BP spokesman.