BP to Sell Majority Stake in Castrol Business for $6 Billion

(Bloomberg) — BP Plc agreed to sell a majority stake in its Castrol lubricants division to US investment firm Stonepeak Partners to raise about $6 billion.

The UK oil giant will divest a 65% stake, retaining the remaining interest via a joint venture, it said Wednesday. While the deal accounts for a sizable chunk of BP’s $20 billion divestment plan, a sale was initially expected to fetch as much as $10 billion.

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BP is shedding assets to reduce debt and turn around years of lagging performance that put the company in the crosshairs of activist shareholder Elliott Investment Management. It kicked off the sale process for Castrol back in February, when then-Chief Executive Officer Murray Auchincloss unveiled a strategic reset, promising to refocus on oil and gas, slash costs and reduce debt.

“The transaction represents a significant milestone in BP’s commitment to accelerate its strategy, including simplifying the portfolio, strengthening the balance sheet, and focusing the downstream on its leading integrated businesses,” the energy major said in a statement.

The Castrol business includes lubricants for autos and industries, and has also been developing liquid cooling technology for artificial intelligence data centers.

The deal with Stonepeak values the unit at $10.1 billion including debt, according to the statement. BP’s retained stake provides exposure to Castrol’s “growth plan” in the coming years, it said, adding that it has the option to sell that down following a two-year lock-up period.

After BP announced its strategic overhaul in February, Elliott criticized the plan for not going far enough. While Auchincloss promised in the summer that the company “can and will do better,” new Chairman Albert Manifold last week decided to replace him, appointing Woodside Energy Group Ltd. chief Meg O’Neill to take the helm in April. Until then, trading head Carol Howle will be interim CEO.

The Castrol transaction is expected to complete by end of next year, subject to regulatory approvals.

M&A Snapshot: BP Sells Majority Castrol Stake to Stonepeak

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