BP Offloads Castrol Majority Stake to Stonepeak in Landmark $10 Billion Deal

MrRightClick · 2025-12-31T14:34:06+00:00

BP has agreed to sell a 65% stake in Castrol to Stonepeak for $10 billion, part of its strategy to optimize its portfolio. This move is expected to generate $6 billion for BP to reduce its debt by 2027 and aligns with its broader asset disposal initiative.

MrRightClick

2025-12-31 14:34:06

Abstract generation in progress

BP has reached an agreement to divest a controlling 65% interest in Castrol, its lubricants division, to Stonepeak, a leading alternative investment manager, marking a significant step in the energy giant’s portfolio optimization strategy. The transaction values the entire Castrol business at $10 billion on an enterprise value basis.

Transaction Structure and Financial Details

The equity value attributed to Castrol stands at $8.0 billion when excluding minority joint venture stakes worth $1.8 billion and debt-like liabilities amounting to approximately $0.3 billion. BP anticipates netting roughly $6 billion in proceeds from the sale, augmented by accelerated dividend distributions, which the company plans to deploy toward reducing its net debt level to the targeted $14-18 billion range by the end of 2027.

The transaction encompasses the sale of minority shareholdings across several key markets. Castrol maintains JV interests in India (49%), Vietnam (35%), Saudi Arabia (50%), Thailand (40%), and various other locations. The India operations represent the most substantial minority holding component in Castrol’s portfolio.

Post-Closing Structure and Timeline

Upon completion of the transaction, a newly formed joint venture will operate with Stonepeak holding a 65% stake while BP retains 35% ownership. Closure is projected for the fourth quarter of 2026, pending necessary regulatory clearances. Following a two-year lock-up arrangement, BP maintains the flexibility to exit its remaining stake entirely. The organization will secure two board positions in the restructured entity at transaction completion.

Strategic Context Within BP’s Broader Agenda

This divestment aligns with BP’s comprehensive portfolio rationalization initiative, part of a larger $20 billion asset disposal program now more than halfway executed. The sale underscores BP’s commitment to streamlining operations, concentrating downstream assets on high-performing integrated platforms, and strengthening financial metrics through accelerated cash generation and shareholder returns.

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