Monday, October 25, 2010

BP (NYSE:BP) Takeover Speculation and the Dividend

Mounting pressure on BP's (NYSE:BP) Bob Dudley to reinstate the dividend says something about the way shareholders view the company, and if they believe the management has confidence going forward.

Continuing speculation the company could be ripe for a takeover isn't without some justification, as numerous elements remain in place that haven't been resolved, and make it difficult, if not impossible, to bring the dividend back.

From the point of view of BP shareholders, they can't understand the numerous variables involved in the underlying reasons behind decision-making at BP, but one thing almost all shareholders understand, no matter what company of sector they're in, is if they increase the dividend or have a dividend, the company has confidence in its future prospects.

For that reason, if BP is able to, they will reinstate the dividend as soon as possible. If not, they could be announcing to their shareholders and competitors they're on the auction block.

In the near future, shareholders don't have to understand the complexities surrounding the fallout coming from the Gulf disaster, all they have to do is wait to see if the dividend is reinstated.

If it isn't, BP is saying through their action, or rather, non-action, they have no confidence at the time for the prospects of the company. If they do that for too many quarters, shareholders will start to flee the company, especially large institutional investors, and BP will have little, if any, defense against being taken over by a larger rival.

The only other option would probably be to split the company up.

Shareholders are getting impatient, and CEO Bob Dudley, and the board of directors, if at all possible, need to get the dividend reinstated asap.


  1. Bod D at BP has been at the helm for less than a month and has indicated many initiatives to right the company for the years ahead including reinstating a dividend of some proportion in 2011.
    Are you shorting the stock? The asap imperative seems a bit self-serving. If you have been following things (which I am sure you have) no dividend announcement will be announced until 2011. Why write what you write??

  2. Who are you and what makes you think you're qualified to comment on BP or any other company? I wish google would stop linking to this blog nonsense.

  3. I agree with the other posters--this is really a trash article that's trying to put BP in a much dimmer light than actually exists. The prospects for the company are good, if not great, and if the company chooses not to reinstate the dividend I, as an investor, will happily acknowledge their jurisprudence in choosing to maintain cash reserves to deal with problems as they arise.

    Also: Dudley is doing an excellent job and, (as previously stated) has only been around a month. Lay off, blogspam.

  4. This article is dripping bull$#it... complete trash as usual that has no business coming across google finance.

  5. Well done to the previous four posters. This is yet another example of the bears creating negative press to scare investors out of the stock. The first poster already posed the question 'are you shorting this stock?'. It would seem the author of the article is indeed short BP.

    Well written, anonymous commenters!

  6. I totally agree. This post is stupid.
    "If no dividend, the only option is to split the company"
    "If no dividend, they have no confidence" ahahaha
    What stupid things !

  7. How on earth can trash articles like this make it on the main newstreams for Google? Surely there must be some form of moderation ability? I wish I could generate scaremongering this easily!

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