Targeted by the active investment giant Elliott, BP PLC-Spons stock price hits a new high since August last year
According to Jefferies analyst Giacomo Romeo's prediction, Elliott may pressure BP in the following five areas: refocusing on traditional oil and gas business, exiting low-carbon activities, monetizing high-valued assets such as infrastructure and retail, maximizing free cash flow by reducing capital expenditures, and accelerating the pace of asset divestitures
Activist investor Elliott bets on BP, stock price surges, can BP break out of its long-standing slump?
According to media reports on Monday, activist investor Elliott increased its stake in BP (British Petroleum), and as a result, BP's stock price surged 7% in early trading on Monday, reaching a high of 464.75 pence, the highest level since August, and is expected to record the largest single-day gain since February 2023.
Over the past year, BP's stock price has fallen nearly 16%, significantly lagging behind its peers. In contrast, Shell's stock price has only dropped 4%, while ExxonMobil has risen 8%. Elliott's investment in BP aims to enhance shareholder value and urge the company to consider transformative measures.
BP has faced a series of setbacks over the past 15 years, from the Deepwater Horizon disaster to the sudden resignation of former CEO Bernard Looney due to personal conduct issues. Looney's incorrect bet in 2020 that global oil consumption had peaked has led to BP's valuation lagging behind its peers.
According to Jefferies analyst Giacomo Romeo, Elliott may pressure BP in five areas: refocusing on traditional oil and gas operations, exiting low-carbon activities, monetizing high-valued assets such as infrastructure and retail, maximizing free cash flow by reducing capital expenditures, and accelerating the pace of asset divestitures. Additionally, Elliott may push for changes in the board and management, including the removal of BP's chairman.
RBC Capital Markets analyst Biraj Borkhataria stated that given BP's performance lagging behind its peers, any activist investor would at least demand a change in the chairman. He also anticipates a push to effectively separate BP's core oil and gas business from its transformation growth engine to help minimize capital investment in these areas.
Current BP CEO Murray Auchincloss will officially take office in January 2024. He has maintained a low profile, gradually downplaying Looney's transformation strategy, which includes acquiring the largest oil reserves in the Middle East, divesting renewable energy assets, and recently announcing a 5% workforce reduction. However, these measures seem to have failed to meet the expectations of some analysts and investors