Cable: We won’t stop bid for BP
THE UK government can do very little to stop a takeover of BP, business secretary Vince Cable told City A.M. yesterday, as suggestions of a large scale approach for the embattled oil major intensified.
Cable said that under the Enterprise Act of 2002, the UK government only had a narrow window to intervene and that it could only do so in the event of any national security issues.
He said: “As I understand, there is no immediate takeover planned. In the event that there was [an attempt] the areas where the government [can step in] are very narrow unless it is a matter of national security.
“BP is a strong company with a strong cash flow. If there was a takeover attempt, we would look at it but our powers are restricted.”
His comments come on the back of news that US rival Exxon Mobil is understood to have asked for clearance from Washington to examine a possible takeover bid for BP worth £100bn.
Although an approach by Exxon is still uncertain, the US government is thought to have told the oil giant, along with one other company, that it would not prevent or stand in the way of a takeover should it wish to make one. Chevron is also said to be monitoring the situation.
A move by Exxon for BP could ignite another trans-Atlantic political fight and trigger concern over foreign ownership of UK companies, similar to when Kraft took over British confectionary maker Cadbury.
Exxon Mobil declined to comment on a possible takeover bid, while a BP spokesperson said the company is not for sale. There are also suggestions that PetroChina is interest in acquiring some BP assets.
Cable also put out the fire on rumours circulating the City about a possible contingency plan drawn up by the government for BP in the event the company collapses.
He told City A.M. that the government doesn’t have a bailout plan for BP should it go under because it is privately owned.
Costs estimations of the spill, some as high as $70bn, have sparked fears that the group might not be able to cope with the bill.
Further to the escalating costs, BP has been knocked off the top spot as the largest company in the FTSE 100 after the 20 April explosion of the Deepwater Horizon rig, which killed 11 people and caused shares to fall drastically, wiping more than 50 per cent off of the group’s market value.
But BP’s shares last week started to recover on news that the group was closer to drilling the relief well and on the speculation about bid interest.
Thursday’s comments from spill boss Bob Dudley that the relief well, in an ideal world, could be finished as early as 27 July, restored faith in shareholders over BP’s ability to tackle the disaster.
The rise in shares has added 20 per cent to BP’s market cap from June’s low point to £68.9bn. Shares closed at 364.80p on Friday after falling only slightly by 0.6 per cent.