The Guardian reports that BP chief executive Bob Dudley has been warned that he must break up his huge oil business into three separate parts to increase its stock market value or face the possibility of a takeover by the Russians or Chinese.
The research note from Investec analysts calls for a “radical, full demerger of BP” to close the acute discount by speeding up the sale of assets and the move into new developing markets. “Bob Dudley should go the whole hog and hive off the US (Amoco) and North Sea (Britoil) businesses to renew BP – no longer ‘Beyond Petroleum’ but as ‘Bric-ish Petroleum’ – a higher growth global player focused on the investment challenges of 2030 – not 1930,” they argue. (Bric is a reference to Brazil, Russia, India, and China.) “If BP does not close the discount, we think the Russians, Chinese or Indians will look hard at the sub 6x multiple”, which denotes it is underpriced.
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