Shell Plc is weighing a takeover of rival BP Plc—but is poised to pull the trigger only after further declines in BP's share price and oil markets. Here's what investors need to know.

Why Shell Could Pursue BP

• Scale & Synergies: A combined Shell-BP would rival ExxonMobil and Chevron, unlocking cost savings across exploration, refining and distribution.

• Relative Strength: Shell's market value (~£149 billion) is nearly double BP's, giving it the firepower to absorb a peer.

• Capital Allocation Debate: CEO Wael Sawan has signaled a preference for buybacks—but large M&A remains on the table if price metrics turn compelling.

Waiting for the “Right” Entry Point

Shell's advisors are modeling scenarios where BP's stock and broader oil prices fall further. By delaying, Shell can:

1. Improve Deal Economics: Lower enterprise multiples reduce dilution risk.

2. Strengthen Balance Sheet: Continued buybacks and bolt-ons keep the balance sheet lean.

3. Gauge Regulatory Appetite: More conservative valuations may ease antitrust scrutiny.

Key Risks & Considerations

Regulatory Hurdles

A merger of two London-based oil majors would trigger intense scrutiny across multiple jurisdictions, from the EU to the U.S.

Execution Complexity

Integrating refining networks, joint ventures and upstream assets—each with unique regulatory frameworks—poses logistical challenges.

Shareholder Sentiment

Investors must weigh the distraction and execution risk of a megadeal against the immediate returns of share repurchases.

What Investors Should Watch

• BP & Shell Credit Metrics: Post-announcement ratings shifts can affect funding costs. Track updates via the Company Rating API.

• Regulatory Filings: Any merger notification will appear in forthcoming 10-K/20-F updates—monitor them through the SEC Filings API.

• Oil Price Moves: Further declines in Brent and WTI will improve deal math. Use real-time commodity data to time potential entry.

Bottom Line

Shell's evaluation of a BP takeover underscores the tension between aggressive growth through M&A and conservative capital returns via buybacks. By tying a bid to lower valuations and oil prices, Shell aims to secure a strategic acquisition without overpaying—while keeping buybacks as a fallback. Investors can stay ahead by tracking credit ratings, regulatory filings, and oil benchmarks to pinpoint when—and if—Shell will make its move.