Following the frenetic mega-deals of last week, including Kinder Morgan’s $38 billion acquisition of El Paso and Statoil’s $4.7 billion acquisition of Brigham Exploration, the pace of deals this week slowed to a crawl. While all the headlines are being grabbed by Q3 earnings figures, there was not a single deal over the value of $50 million. There were still however enough rumours circulating to have significant effects on shareholder sentiment.
In the midst of BP (LON:BP.) reporting normalised earnings of $5.1 billion, the company also revealed that it planned to up its assets divestiture program to $45 billion and return more cash to shareholders. The result of the announcement caused an immediate 4.5% boost to the share price of BP before this was tapered by news of further delays to the company’s $7 billion sale of a 60% interest in Pan American Energy Corp, the largest divestiture so far in the company’s programme. The acquirer, Bridas Corp, and BP are both awaiting approval for the deal from Argentinean authorities and although neither party has indicated a desire to pull out so far, the deal deadline of November 1st is surely going to be missed, which would give Bridas Corp the power to recoup its $3.5 billion deposit plus an additional $700 million payment from BP.
Strong rumours were also circulating concerning £RDSA allegedly being on the cusp of a bidding war with Reliance Industries for the acquisition of Valero Energy. The move came as an unwelcome surprise for shareholders who responded via a limp share price performance as its peers prospered. When the economy undergoes a demand slump, a state which is looking increasingly likely with every new piece of economic data released on the market, it is the front line of the refining and marketing sector that gets hit the quickest and hardest. If the rumours are true, Shell is lining up a bid for a company operating in the most over-saturated refining market in the world. Moreover, a bidding war would erode any chances of acquiring the company on the cheap. The move would also be in stark opposition to the recent trend of demerging refining and marketing arms into separate companies as has been the case with Marathon Oil and ConocoPhillips.
There were further rumours that TNK-BP had finalised the acquisition of an asset offshore Brazil for $1 billion. The move…
