Shares in BP rose almost 7 per cent in early trading on Monday as activist hedge fund Elliott Management’s acquisition of a stake raised hopes of a shake-up at the struggling oil major.
The size of Elliott’s stake has not been disclosed but its involvement at BP, which was first reported on Saturday, will fuel talk of an overhaul of the group’s strategy and a shake-up of its board.
“We think any activist would call for a change in the chairperson at the very least,” said Biraj Borkhataria, an analyst at RBC Capital Markets.
The shares rose to 462p, after closing on Friday at 433.25p.
Before Monday’s rise, BP had suffered a share price decline of almost 10 per cent in the past year while investors had criticised its underperformance and uncertainty over its strategy.
The group, one of the top 10 companies on the London Stock Exchange by market capitalisation, has been chaired by Helge Lund since 2019. It said last month that an investor day scheduled for this week would be delayed until February 26 so that chief executive Murray Auchincloss could recuperate from a “planned medical procedure”.
Auchincloss is expected to use the event to try to convince investors that he has the right strategy for the company.
Analysts at Jefferies said they believed Elliott’s stake in the company could result in board changes and a slimming down of its business “with a focus on exiting low carbon assets and certain retail regions”.
The hedge fund could also push for capital outlay to be focused on upstream projects, which would maximise cash flow generation, they added.
Borkhataria suggested that a sum-of-the-parts valuation of BP’s business would be much higher than the group’s current enterprise value of about $130bn including debt.
