The activist hedge fund targeting BP has amassed a stake in the oil company worth almost £3.8bn, or 5% of its shares, to become its third biggest shareholder, according to reports.
Elliott Management is widely expected to use its grip on the 120-year-old company to demand sweeping changes, including a potential break-up of the company, after BP lost almost a quarter of its market value in the past two years.
Sources close to Elliott have reportedly warned that BP will be pushed to abandon its commitment to green energy by limiting its spending on renewables and selling off some of its low-carbon investments, according to the Financial Times, which first reported the size of the hedge fund’s stake.
The aggressive New York-based fund is also expected to insist on a boardroom cull to oust BP’s leadership, including the chair, Helge Lund, alongside a reset of the company’s strategy.
Elliott typically takes stakes in companies it believes have lost value because of mismanagement, and demands changes that can improve its market value. It has previously agitated for change at the drugmaker GSK and the housebuilder Taylor Wimpey.
The hedge fund emerged as a threat to BP’s leadership over the weekend when it was reported that it had taken an undisclosed stake in the company. BP’s chief executive, Murray Auchincloss, was forced to use the company’s full-year results on Tuesday to defend it against the threat of a radical overhaul by promising a “fundamental reset” of its strategy.
Auchincloss said BP had already “laid the foundations for growth” in 2024 by “reshaping its energy portfolio” and promised to “fundamentally reset our strategy and drive further improvements in performance” at an investor day on 26 February.
“It will be a new direction for BP, and not business as usual. I am excited about it and look forward to updating the market and seeing many of you then,” he said.
Under its former boss Bernard Looney, BP set a path in 2020 to become a net zero energy company by 2050, which included some of the greenest spending plans of any major oil company and won the approval of climate campaigners including Greenpeace.
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However, the company has backtracked from its green ambitions as surging global oil and gas market prices made fossil fuel production increasingly profitable, and handed an advantage to rivals including Shell and ExxonMobil, which plan to grow their production despite climate warnings.
The company’s share price bounced by 7% on Monday after it emerged that Elliott had taken the stake. The stock has traded at similar levels since.
