Galp’s TotalEnergies Deal Triggers Investor Backlash and Stock Decline
Galp’s recent deal with TotalEnergies in the stock market today has sparked debate among investors. The agreement, announced in early December, involved an exchange of stakes in exploration projects rather than a cash transaction. Since then, the company’s shares have dropped sharply, trading nearly 25% below their November high.
The deal’s structure took some investors by surprise. Many had expected a cash payment, but instead, Galp swapped its interests in Namibian exploration blocks for a stake in TotalEnergies’ assets. This approach has weighed on Galp’s market value, which now stands at nearly €10 billion.
João Queirós, head of trading at Banco Carregosa, believes the agreement still holds strategic value. He argues that, in today’s uncertain global climate, the deal could bring long-term benefits for Galp. While acknowledging the market’s negative reaction, he views it as a correction following a strong rally over the past 12 to 14 months.
Queirós also understands why some shareholders decided to sell. However, he does not see the move as a major misstep by Galp’s management. Instead, he describes it as a logical decision under current economic conditions.
Galp’s share price remains under pressure, reflecting investor concerns over the non-cash nature of the deal. The company’s market value has fallen, but analysts like Queirós suggest the long-term outlook may still justify the agreement. The full impact of the Namibia partnership will likely become clearer as exploration progresses.
