BP PLC’s Chief Executive Tony Hayward intensified what one BP investor described as an international “charm offensive” aimed a reassuring key local partners and encouraging deep-pocketed investors to see the value in BP’s beaten-down share price.
Mr. Hayward met with Abu Dhabi’s powerful Crown Prince Mohammed bin Zayed Al Nahyan during a visit to the oil-rich sheikdom Wednesday. During the visit he said that he would be open to seeing the city state’s sovereign wealth fund buy a stake of up to 10% in BP, a person with knowledge of the meeting told Zawya Dow Jones.
BP spokeswoman Sheila Williams declined to comment on the details of any meetings, but said Mr. Hayward met with “key business partners as well as staff” in Abu Dhabi to discuss the company’s day-to-day business and give them “the opportunity to raise any concerns about BP.” A spokesman for the crown prince was unreachable for comment. A spokesman for the federal government in Abu Dhabi said he had no knowledge of the meetings.
Shortly before boarding a plane in Abu Dhabi, Mr. Hayward told reporters, “We are very delighted to meet with our long-term partners and friends,” without providing further details. His flight was bound for Angola, another strategic location for BP, according to airport officials,
Since leaving the U.S. under a cloud following harsh criticism of his handling of the oil spill in the Gulf of Mexico, Mr. Hayward has traveled the world to reassure governments and business partners that BP can continue to operate as normal in their countries—and that the company isn’t planning a fire sale of key assets—despite facing tens of billions of dollars in potential liabilities.
Late last month, Mr. Hayward visited Russia, where he pledged to Igor Sechin, the country’s top energy official, that BP had no intention of selling its 50% stake in joint venture TNK-BP Ltd. and its small holding in state-controlled OAO Rosneft.
His next destination was Azerbaijan, where Mr. Hayward on Tuesday “reiterated BP’s commitment to Azerbaijan and to the continuing successful cooperation with the government and [Azeri state oil company] Socar,” BP said.
All three countries are crucial for BP. Of company’s total oil production in 2009, Russia provided 33%, Angola 8.3%, Abu Dhabi 7.1%, and Azerbaijan 4%, according to the company’s annual report.
The BP spokeswoman declined to say if Mr. Hayward will visit more countries. A person familiar with Mr. Hayward’s itinerary said it was likely to take in other strategic areas such as Egypt or Angola in the near future.
Speculation that sovereign wealth funds from oil-rich Middle Eastern states are ready to buy big stakes in BP has boosted the company’s shares in recent days. Libya’s top oil official, Shokri Ghanem, said Monday that BP is a bargain and recommended the nation’s sovereign wealth fund invest in the oil giant.
A member of Kuwait’s top oil policy committee meanwhile moved Tuesday to quell speculation his country would increase its stake in BP.
“The investment authority in Kuwait already has a stake in BP and has lost a considerable amount on the book value,” said Imad Al Atiqi, a member of Kuwait’s influential Supreme Petroleum Council. According to data provider FactSet, the Kuwait Investment Authority held a 2.8% stake, or 530.5 million shares, in BP as of June 1.
If a fund like the Abu Dhabi Investment Authority were to build up a sizeable stake in BP, it would amount to a public vote of confidence in the company. BP has ruled out issuing new shares, so the stake purchase wouldn’t provide any fresh capital.
However, it is questionable whether such a move could block potential takeover approaches. Under U.K. takeover rules, a predator can effectively take control of a company with an offer that wins approval of half its shareholders, and it could force a hold-out to sell if its offer wins acceptance from 90% of investors.
In the past, BP has opposed Mideast sovereign wealth funds taking a stake of more than 10%. The company objected strongly when Kuwait amassed a stake of more than 20% in the aftermath of the 1987 stock-market crash. Kuwait was subsequently forced to sell down its stake to less than 10% after an investigation by the U.K. Competition Commission—then known as the Monopolies and Mergers Commission—decided that the higher stake would give Kuwait undue influence over BP’s strategy and decision-making.
The prospect that a deep pocketed investor could acquire a sizeable stake in the company by buying existing shares on the open market has nevertheless lifted BP stocks. BP shares recently traded at 363 pence, up almost 20% from a closing price of 303 pence on June 29—a 14-year low.
Despite the boost, some BP investors are skeptical that many people would be willing to sell at the current price, which remains at a little over half its level before the oil spill. “Investors shouldn’t be looking to sell at this point when the relief well is so near,” said Ivor Pether, a fund manager at Royal London Asset Management. “We added to our holding when [the share price] was at £3.”
Separately, a BP spokesman said the company hasn’t agreed to demands that it notify the U.S. Department of Justice at least 30 days ahead of any significant financial or asset transactions. The company has received a letter from the Justice Department making this demand, but hasn’t yet responded, the spokesman said.