Abu Dhabi National Oil Company (ADNOC) had been looking into a potential takeover bid for BP (LON: BP), however, the firm has decided against the move.
The state owned business had been recently considering an acquisition of the London-listed supermajor, but the deal did not get past preliminary discussions, Reuters reported.
People familiar with the matter explained that the decision came down to the firm valued at £88 billion not aligning with ADNOC’s current strategy.
ADNOC and BP reportedly held meetings recently with the former seeking advice from investment banks on a potential deal.
All options were considered when assessing a takeover, one source said, including buying a large stake in the supermajor.
It is understood that talks “didn’t go far,” one source explained.
However, it has been reported that BP has been one of many firms that ADNOC has considered taking over.
Analysts and investors have said that BP could be a potential takeover target after underperforming compared to its peers in recent years.
BP has been outlining plans to slash oil production and ramp up renewables rollout, compared to its rival Shell which has been doubling down on hydrocarbons and is rumoured to be looking to join the New York Stock Exchange to align the company’s value with its US counterparts.
Shell chief executive Wael Sawan “‘I have a location that clearly seems to be undervalued,” outlining plans to move the supermajor’s primary stock listing from London to New York.
In contrast with BP’s carbon-conscious outlook, ADNOC has been increasing oil and gas production with the firm’s chief executive looking to make the firm a global major.
BP expects to report a strong performance from its trading business for the first quarter of this year, with a notable improvement in results from buying and selling oil.
“BP’s first trading update suggests limited downside to consensus numbers” for first-quarter earnings, with strong gas trading results providing an uplift, Jefferies analyst Giacomo Romeo said in a note.
BP’s gas marketing and trading business maintained the strong performance seen in the prior period, while oil showed improvement from a weak fourth quarter, according to the company.
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