BP provided one of the few distractions for traders yesterday as global slowdown worries sent the FTSE 100 to its sharpest fall since November. BP was a talking point after JPMorgan Cazenove speculated about the chances of ExxonMobil launching a bid for its besieged rival. "We believe the economics of such a potential combination are compelling, and we question why the market is not factoring in the possibility of it ever happening," said analyst Fred Lucas.
"The market has lost sight of the intrinsic value that is resident in an assetrich company like BP. We very much doubt that keen-eyed industry players have lost sight of BP's value." Mr Lucas argued that Exxon could pay anything up to 700p per BP share before the bid became earnings dilutive. Anti-trust concerns could be sidestepped by returning BP's $50bn downstream business to BP shareholders at a later date, he added. BP closed down 1.7 per cent to 302¾p - outperforming a sell-off in the wider market that pushed the FTSE 100 down 3.1 per cent or 157.46 points to 4,914.22. Every blue-chip stock ended lower.
Author: Bryce Elder
