Following a strategic review, bp has agreed to sell a 65 per cent stake in Castrol to Stonepeak for an enterprise value of $10.1 billion, reflecting an EV/LTM EBITDA of 8.6x and highlighting the business’s growth potential.

The deal marks a key step in bp’s strategy to simplify its portfolio, strengthen its balance sheet, and focus on its leading integrated downstream businesses.

The transaction will generate net proceeds of approximately $6.0 billion for bp, including $0.8 billion representing pre-payment of future dividend income on bp’s retained 35 per cent stake and other adjustments.

After accounting for minority interests of $1.8 billion and debt-like obligations of $0.3 billion, Castrol’s implied equity value is $8.0 billion. Many of the minority interests relate to publicly listed Castrol India Limited.

Post-transaction, a new joint venture will be formed with 65 per cent ownership by Stonepeak and 35 per cent by bp.

bp retains exposure to Castrol’s growth, supported by nine consecutive quarters of year-on-year earnings growth, and can optionally sell its remaining stake after a two-year lock-up.

The deal is expected to close by the end of 2026, subject to regulatory approvals, and forms part of bp’s $20 billion divestment programme.

Proceeds will reduce net debt toward the 2027 target of $14–18 billion, with divestments to date totalling $11 billion.

Carol Howle, interim CEO at bp, said: “Today’s announcement is a very good outcome for all stakeholders. We concluded a thorough strategic review of Castrol, that generated extensive interest and resulted in the sale of a majority interest to Stonepeak. The transaction allows us to realise value for our shareholders, generating significant proceeds while continuing to benefit from Castrol’s strong growth momentum. And with this, we have now completed or announced over half of our targeted $20bn divestment programme, with proceeds to significantly strengthen bp’s balance sheet. The sale marks an important milestone in the ongoing delivery of our reset strategy. We are reducing complexity, focusing the downstream on our leading integrated businesses, and accelerating delivery of our plan. And we are doing so with increasing intensity – with a continued focus on growing cash flow and returns, and delivering value for our shareholders.”

Anthony Borreca, Senior Managing Director and Co-Head of Energy at Stonepeak, said: “Lubricants are a mission-critical product, which are essential to the safe and efficient functioning of virtually every vehicle, machine, and industrial process in the world. Castrol’s 126-year heritage has created a leading market position, an iconic brand, and a portfolio of differentiated products that deliver meaningful value to its customers. We are excited to work alongside Castrol’s talented employees, coupled with bp’s continued guidance as a minority interest holder, as we support the business’s continued growth." -TradeArabia News Service