British Oil and gas major bp plc (BP,BP.L,BP_UN.TO) announced Wednesday its agreement to sell a 65% shareholding in lubricants maker Castrol to alternative investment firm Stonepeak at an enterprise value of $10 billion.
The implied total equity value of Castrol is $8.0 billion excluding JV minority interests totaling $1.8 billion, and other debt-like obligations of around $0.3 billion, and subject to customary adjustments.
The sale includes minority interests in Castrol, principally in India of 49% interest, Vietnam of 35%, Saudi Arabia of 50%, Thailand of 40% and other jurisdictions.
The company noted that a significant proportion of Castrol JV minority interests relate to the shareholding in Castrol India Limited.
The transaction is expected to complete by end of 2026, subject to regulatory approvals. Total net proceeds in the deal to bp would be around $6 billion including accelerated dividend payments, which will be fully utilised to reduce net debt towards bp's target of $14-18 billion by end 2027.
Following the deal closure, a new joint venture will be incorporated comprising a 65% Stonepeak and 35% bp ownership. Following a two-year lock-up period, bp has optionality to sell its 35% stake in Castrol.
bp will appoint two Board seats to the new incorporated joint venture on closing.
Bp noted that its retained stake provides exposure to Castrol's growth plan over the coming years.
The decision follows a comprehensive strategic review of Castrol. bp has now completed or announced over half of its targeted $20 billion divestment programme, with proceeds to significantly strengthen its balance sheet.
Carol Howle, interim CEO at bp, said, "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..."
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