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.