BP has agreed to sell a 65% stake in its Castrol lubricants business to private equity firm Stonepeak for about $6 billion. The move is part of a $20 billion divestment plan aimed at reducing debt and boosting returns. The petroleum giant will retain a 35% stake in a new joint venture with Stonepeak, which it can sell after a 2-year lock-in period. The deal values Castrol at $10.1 billion. The implied total equity value of the company is $8 billion after deducting JV minority interests totalling $1.8 billion and other debt-like obligations of around $300 million. A significant proportion of Castrol JV minority interests relates to the shareholding in the publicly listed Castrol India Limited. Interim CEO of BP, Carol Howle, 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. 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.”
