BP Sells Majority Stake in Castrol to Stonepeak in $10 Billion Deal

Core Viewpoint - BP has agreed to divest a majority stake in its Castrol lubricants business to Stonepeak for a $10 billion enterprise value, generating approximately $6 billion in proceeds to accelerate debt reduction and streamline its downstream portfolio [1][2]. Group 1: Transaction Details - The deal values Castrol at an implied 8.6x EV/LTM EBITDA, with Stonepeak acquiring a 65% stake and BP retaining 35% [2]. - The sale will provide BP with around $6 billion in net proceeds, including $800 million in accelerated dividend pre-payments linked to BP's retained stake [3]. - The transaction simplifies BP's downstream operations and supports its strategy of focusing on integrated businesses with higher returns [3]. Group 2: Strategic Implications - This divestment is part of BP's broader strategy to tighten its balance sheet, optimize its portfolio, and enhance cash generation, having completed or announced over half of its $20 billion divestment program with cumulative proceeds of approximately $11 billion [4]. - Castrol remains a well-recognized lubricant brand with significant market positions across automotive, industrial, and marine sectors, allowing BP to retain exposure to its growth trajectory through the new joint venture [4][5]. Group 3: Future Outlook - Stonepeak plans to support Castrol's expansion while BP maintains minority participation, with Castrol having posted nine consecutive quarters of year-over-year earnings growth [5]. - Regulatory approvals for the transaction are expected to be completed by the end of 2026, after which BP will account for its retained stake under the equity method [6].