BP boss Tony Hayward is currently on tour in the Middle East, officially to reassure its partners but also - if reports are to be believed - to try and persuade a cash-rich Middle Eastern investor to buy a big chunk of BP shares. Since the oil giant is now worth about half as much as it was pre-Deepwater, it needs all the help it can get to fend off suitors and shore up its stock price, so this sounds like a good defensive move. Particularly as it continues to be bullied by the US Government: the latest is that the White House apparently wants advance notice of any major deals BP does, which is a rather extraordinary thing for a government to demand of an overseas-listed, supposedly independent, international company...

Various reports today suggest that Saudi investors are flying in to London today to talk to BP about taking a stake of between 10% and 15%, while CEO Tony Hayward is in Abu Dhabi - supposedly to offer reassurance on BP's long-term prospects, but he's unlikely to give them the cold shoulder if they want to talk turkey. Sovereign wealth funds from Singapore, Kuwait, Qatar, Libya and even China have also been mentioned as possible investors in the last few days. And since BP has already ruled out issuing new shares (which would hit its beleaguered shareholders again, by diluting the value of their stake), they'd have to buy on the open market, which would prop up the price. So it's no wonder BP shares have enjoyed a bit of a bounce this morning.

So it looks like there's plenty of interest. And BP does have an encouraging precedent if it goes down this road: UK bank Barclays managed to avoid taking Government money by tapping the Middle East for funds (albeit on preferential terms that infuriated some investors), and seems to have weathered the economic storm better than most, without much public interference from its new backers. On the other hand, we suppose the question is whether a Middle Eastern backer would be as happy to be a silent investor in an oil business (an industry it knows well) as it would in a bank (which it knows less well).

Then again, the US Government seems to think you don't actually need to own a stake in BP to have a degree of influence over how it does business. BP has revealed that the Department of Justice has asked for advance notice of any major asset sales or investment deals - presumably so it can stick its oar in if it doesn't like the result. Apparently BP hasn't responded yet, but since its general approach seems to be to do whatever the President wants (probably sensible, politically), we wouldn't be surprised if it plays ball.

In today's bulletin:
Nursing job cuts highlight major problem with 'efficiency savings'
Bolland off to a flier as M&S sales rise 3.6%
BP looks East - as US Government demands further concessions
£35m a year for the Business Link website? Really??
Helping businesses walk the walk on CSR

blog comments powered by Disqus