KEY POINTS
- Elliott Management has taken a 5 percent stake in BP.
- The hedge fund is pushing for divestments and cost reductions.
- BP’s CEO plans a strategic reset following a 35 percent profit drop.
Activist investor Elliott Management has acquired nearly a 5 percent stake in BP and is now pushing for major divestments and cost-cutting measures to improve the company’s performance, according to a source familiar with the matter.
The investment firm, known for aggressively influencing corporate decisions, is engaging with BP ahead of its Capital Markets Day on February 26, a key event where the company is expected to outline its future strategy.
A source told Reuters that Elliott sees this meeting as an opportunity for BP to announce significant changes, including selling off non-core assets, particularly in its low-carbon division.
However, the investor is not advocating for increased oil and gas investments or a potential merger with another company.
BP has acknowledged Elliott’s involvement but has not commented on any potential changes.
BP struggles with profitability amid leadership shifts
BP’s new CEO, Murray Auchincloss, is under pressure to turn things around. Since stepping into the role last year, he has faced tough market conditions, including weak refining margins and declining profits.
The company reported annual profits decreased by 35 percent which caused analysts to miss their profit prediction and forced a review of its future direction.
Auchincloss has begun a fundamental business change to enhance BP’s market performance and operational stability within the changing energy sector.
BP’s stock experienced positive growth after Elliott disclosed participation, indicating that shareholders view operational and financial restructuring as favorable prospects.
With a market value of 75 billion pounds ($93.86 billion), BP remains significantly smaller than its main rival Shell, which has managed to outperform in the UK energy sector.
Elliott’s history of pushing corporate overhauls
Elliott’s involvement in BP is not its first major energy sector intervention. The hedge fund previously deployed similar pressure on Hess and Phillips 66 to redirect company strategy and sell assets to boost shareholder value.
The activist firm’s latest push for BP is being led by Gaurav Toshniwal and John Pike, both of whom have deep experience in energy investments. They aim to generate superior investor returns from BP operations instead of permitting continued underperformance.
A Financial Times report confirmed that Elliott controls 3.8 billion pounds worth of BP shares while BlackRock maintains a 9 percent stake and Vanguard controls a 5 percent stake.
While Elliott is not calling for BP to shift its listing to the U.S., it sees room for significant changes within the company to boost efficiency and shareholder value.
