Two of Europe’s largest oil companies, Shell and TotalEnergies, are considering moving their stock exchanges to Wall Street, potentially leaving London and Paris. Despite their significant presence on local stock exchanges, both companies are frustrated with the lower value of their stock compared to US oil majors. This has led to discussions about relocating their shares to the US.
TotalEnergies and Shell currently trade at lower price-to-cash flow ratios compared to US counterparts, indicating that their stocks may be undervalued. Alastair Syme, a managing director at Citi, notes that European stocks have historically traded at a discount to US stocks. The broader divergence between European and US stocks has widened this gap, prompting Shell and TotalEnergies to consider a move.
TotalEnergies CEO, Patrick Pouyanne, has confirmed that the company is seriously exploring the idea of relocating its listing to New York. Similarly, Shell’s CEO, Wael Sawan, has expressed concerns about the undervaluation of the company relative to US peers. While a move to Wall Street is not currently being actively discussed, Shell is focusing on strategies to boost the value of its stock.
The potential move of Shell and TotalEnergies to Wall Street has raised concerns for London’s stock exchange. Several companies have already left the London Stock Exchange for other cities or chosen New York for their public listings in recent years, indicating a trend towards US markets. An exit by these major oil firms would have significant implications for their home stock markets, particularly London’s FTSE 100 index.
The pressure on European energy companies to address climate commitments and ESG issues has increased, leading to discussions about a potential move to Wall Street. While former Shell CEO, Ben van Beurden, has expressed the belief that the company is undervalued, there is still hope for remaining in London. The probability of Shell and TotalEnergies actually relocating their listings to the US remains low, as there are advantages to maintaining associations with their home countries.
Overall, the potential departure of Shell and TotalEnergies could have far-reaching consequences for London’s stock exchange and the global market. While the companies are exploring options to improve the value of their stock and considering a move to Wall Street, the final decision will depend on a variety of factors including market conditions, shareholder pressures, and strategic considerations for both firms.