24th Dec 2025 08:50
(Alliance News) - BP PLC on Wednesday said it will receive proceeds of around USD6 billion from the sale of a 65% stake in its lubricants brand Castrol to private equity firm Stonepeak Partners LP.
The London-based oil major said the deal puts an enterprise value on Castrol of around USD10.1 billion.
This represents an implied multiple of enterprise value to earnings before interest, taxes, depreciation and amortisation over the past 12 months of 8.6x "reflecting the strength of the business and future growth potential", BP said.
The implied total equity value of Castrol is USD8.0 billion after deducting joint venture minority interests totalling USD1.8 billion, debt-like obligations of around USD0.3 billion, and other adjustments, BP said.
A significant proportion of Castrol joint venture minority interests relate to the shareholding in the publicly listed Castrol India Ltd.
The USD6.0 billion proceeds due to BP include around USD800 million for the pre-payment of future dividend income over the short to medium term on BP's retained 35% stake and other adjustments.
Back in February this year, BP announced a strategic review of Castrol as part of plans to raise USD20 billion by the end of 2027 through disposals.
Earlier this month, the Financial Times said New York-based investment firm Stonepeak had emerged as the leading contender to buy Castrol for a reported USD8 billion.
Shares in BP were 0.4% higher at 429.15 pence each in London on Wednesday morning. The wider FTSE 100 index was down 0.2%. BP has a market capitalisation of GBP66.63 billion.
On Wednesday, BP said the sale followed a comprehensive strategic review of Castrol with proceeds to be used to reduce debt towards a target of USD14 billion to USD18 billion by end-2027. As of the end of the third quarter of 2025, BP's net debt was USD26.1 billion.
"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 FTSE 100 listing said.
On completion, which is expected by the end of 2026, a new joint venture will be incorporated comprising a 65% Stonepeak and 35% BP ownership.
BP said its retained stake "provides exposure to Castrol's growth plan over the coming years, which builds on a strong track record of nine quarters of consecutive year on year earnings growth."
BP has the option to sell its 35% stake in Castrol after a two-year lock-up period.
"Today's announcement is a very good outcome for all stakeholders," said Carol Howle, interim chief executive at BP.
"With this, we have now completed or announced over half of our targeted USD20 billion 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," she added.
Howle took temporary charge of BP last week after the exit of then-CEO Murray Auchincloss.
Howle, who is executive vice president, supply, trading & shipping of BP, will serve as interim CEO until Woodside Energy Group Ltd boss Meg O'Neill joins on April 1, 2026.
Auchincloss will serve in an advisory role until December 2026 to ensure a smooth transition.
By Jeremy Cutler, Alliance News reporter
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