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BP or Not BP? That is Exxon's Question. Meanwhile, I'm in a Quandary

By Malcolm Stacey | Monday 13 March 2017

Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Hello Share Shakers. A bit of a dilemma faces me. I have some BP (BP.) shares in my ordinary trading account. I want to switch them to my ISA. When I do that, there’ll be an interim few days when I no longer hold the stock. For BP at the moment, this is a bit dangerous.

Those old rumours that the mighty American oil giant Exxon Mobil is interested in bidding resuscitated at the weekend.  The word is that big shareholders have been sounded out on their views. And it’s being conjectured that a bid would perhaps put another third on top of a present share price which is fairly lamentable.

According to Sod’s law, which controls so much of our trading, I expect the bid to come in while I am in cash rather than the shares. I may have to take the risk. But then again perhaps not.

Let’s look at the chances of a take-over. Well, Royal Dutch Shell (RDSA) snaffled BG at a time when the oil price was really low and some in the City thought it would build up Shell’s debt and was a bad idea. But when you are up against it - as most oil giants are these days with the still low price of Brent crude - amalgamation is a reasonable play.

You can cut costs a lot as the advantages of synergy come into play. That means getting rid of duplicate jobs and refining facilities. And those are just two examples of where cuts can be made.

If Exxon was to take over BP, it would be the biggest merger of all-time. And it’s likely that the British government might object.

Meanwhile, the low pound is putting big British giants in the frame for take-over perhaps more than ever before. There have not been many acquisitions yet, but many in the City expect there may be quite a few bids just over the horizon.

Maybe BP is one of them. It’s a fact that many shareholders are dissatisfied with the share price now and may put their faith in new management to protect their interests.

So is it time for me to go into cash for a few days to swap accounts? Perhaps not. I just don’t know.

I’ll seek some advice perhaps in the Punter’s Return.

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