Some BP board members favour breaking up the $129 billion oil giant, according to people familiar with the matter, after years of smaller spinoffs failed to assuage investor pressure for higher returns. No decision has been made, chief executive Meg O'Neill appears opposed, and a BP spokesperson said: "This is categorically false." The company is due to report earnings on Friday.
The people familiar with the matter said no decision has been made and the full board has not formally discussed the possibility of a breakup. The company could ultimately choose not to move forward with any plans, they said.
A BP spokesperson said: "This is categorically false."
BP, one of Britain's largest public companies and an anchor of a London Stock Exchange that has lost a series of key listings to the US, has already contemplated slimming down its retail exposure. It has recently divested or considered divesting from a number of other assets, including stakes in US pipelines and onshore wind farms, North Sea oil and gas production, and startups in its venture capital portfolio, in pursuit of what O'Neill has called a "simpler, stronger, more valuable BP."
A breakup could dramatically reshape the industry and prompt a rush for assets among the other oil majors, the people said. It could also elicit a backlash from the UK government, if a breakup prompts BP to relist the company in the US and continues the outflow of FTSE companies from Britain.
The response of big shareholders, including activist investor Elliott, is unknown. Elliott has pushed for relistings or relocations at other companies before, including dual-listed BHP, but has refrained from such a push at BP, choosing instead to urge the company to boost its free cash flow, divest its renewables business, and improve capital returns.
Analysis
Why This Matters
- A breakup of BP would be a major corporate restructuring in the oil industry and could reshape competition among the major producers.
- It could accelerate the movement of London-listed companies to US markets, a politically sensitive issue in Britain.
- The reported board division highlights continuing investor pressure on oil majors to simplify their portfolios and return more cash.
Background
BP is a British oil and gas major and one of the largest companies on the London Stock Exchange. Under chief executive Meg O'Neill it has pursued a strategy of divesting assets and simplifying its portfolio, a course she has described as creating a "simpler, stronger, more valuable BP." The report of board-level support for a full breakup has not been formally discussed by the full board and has been denied by the company.
Key Perspectives
Some BP board members: According to people familiar with the matter, favour breaking up the company after years of smaller spinoffs failed to satisfy investor pressure.
Meg O'Neill: Appears to oppose a breakup, according to one person familiar with the matter.
BP spokesperson: "This is categorically false."
Elliott: Has urged BP to boost free cash flow, divest its renewables business and improve capital returns, but has not pushed for a relisting or relocation of BP.
What to Watch
- BP's earnings report on Friday, which may clarify the company's strategy.
- Whether the full board formally discusses a breakup or any plan emerges.
- The reaction of big shareholders, including Elliott, to any proposal.
- Any UK government response if a breakup leads BP to relist in the US.
Checked
12 claims in this story checked against 1 source: 11 supported.
Show each claim
- SupportedBP denies the report that some board members favour a breakup.Semafor: “A BP spokesperson said: “This is categorically false.””
- SupportedSome BP board members favour breaking up the company.Semafor: “Some board members of global oil-and-gas giant BP are in favor of breakup of the company, according to people familiar with the matter”
- SupportedBP is valued at $129 billion.Semafor: “The $129 billion company could ultimately choose not to move forward with any plans”
- SupportedCEO Meg O’Neill appears opposed to a breakup, according to sources.Semafor: “CEO Meg O’Neill appears to be opposed to the move, one of the people said.”
- SupportedBP is due to report earnings on Friday.Semafor: “The company is slated to report earnings on Friday.”
- SupportedYears of smaller spinoffs have failed to ease investor pressure for higher returns.Semafor: “following years of smaller spinoffs that have failed to assuage pressure from investors to boost returns.”
- SupportedNo decision has been made about a breakup.Semafor: “No decision has been made”
- SupportedA BP spokesperson said, “This is categorically false.”Semafor: “A BP spokesperson said: “This is categorically false.””
- SupportedThe full board has not formally discussed a breakup.Semafor: “The full board has not formally discussed the possibility of a breakup, the people said.”
- SupportedBP could ultimately decide not to proceed with any plans.Semafor: “The $129 billion company could ultimately choose not to move forward with any plans, these people said.”
- SupportedO’Neill described her goal as a “simpler, stronger, more valuable BP.”Semafor: “in pursuit of what O’Neill has called a “simpler, stronger, more valuable BP .””
- Partly supportedPeople familiar with the matter said a breakup could reshape the industry and prompt a rush for assets among other oil majors.Semafor: “The move could dramatically reshape the industry and prompt a rush for assets among the other oil majors.”
