BP offloads Castrol majority stake to Stonepeak at $10 billion value

London. BP agreed to sell a 65% stake in its Castrol lubricants business to Stonepeak Partners at an enterprise value of $10.1 billion, generating around $6 billion in net proceeds to slash net debt. The deal marks a key step in BP's $20 billion divestment push, with over half now completed or announced.

The transaction implies an EV to last twelve months EBITDA multiple of 8.6 times, reflecting Castrol's growth trajectory across nine straight quarters of earnings gains. BP retains a 35% stake in a new joint venture, with an option to exit after a 2-year lock-up.

Proceeds include $0.8 billion in accelerated dividends on BP's retained share, pushing net debt toward a $14-18 billion target by end-2027 from $26.1 billion at Q3 end. The sale simplifies BP's downstream portfolio, concentrating on integrated energy units amid activist pressure and a leadership transition.

“We concluded a thorough strategic review of Castrol, which generated extensive interest and resulted in the sale of a majority interest to Stonepeak," said Carol Howle, BP interim CEO. "And with this, we have now completed or announced over half of our targeted $20 billion divestment programme, with proceeds to strengthen bp’s balance sheet significantly.

"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.”

Castrol spans automotive, industrial, and emerging AI data centre cooling, with minority interests in India, Vietnam, Saudi Arabia, and Thailand. Stonepeak takes majority control, partnering with BP's ongoing involvement.

“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," said Anthony Borreca, Stonepeak Senior Managing Director and Co-Head of Energy. "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."

The deal follows February's strategy reset under former CEO Murray Auchincloss, targeting oil focus and cost cuts amid Elliott Investment criticism. Recent board changes named Woodside's Meg O'Neill as CEO from April, with Howle to serve as interim CEO.

Completion expected by the end of 2026, pending approvals. BP plans two board seats in the JV and treats its stake as equity-accounted, forgoing near-term dividends due to Stonepeak's distribution preference.

Castrol's non-controlling interests averaged $100 million annual net income share since 2019, with a 30% effective tax rate. BP moves high-grade assets, optimises costs and prioritises cash returns as it streamlines for profitability.

- With inputs from Bloomberg.