bp agrees to sell a 65% stake in Castrol to Stonepeak, advancing its divestment strategy and strengthening its balance sheet.
Following an extensive strategic assessment of its lubricants business, bp has entered into a definitive agreement to divest a 65% ownership stake in Castrol to global investment firm Stonepeak. The transaction values Castrol at an enterprise value of approximately $10.1 billion, implying an EV to last-twelve-months EBITDA multiple of around 8.6x. This valuation reflects Castrol’s resilient earnings profile, strong brand equity, and long-term growth prospects across automotive and industrial lubricant markets.
The deal marks a key milestone in bp’s ongoing strategic reset, which is focused on simplifying its portfolio, reinforcing its balance sheet, and sharpening attention on core downstream businesses. As part of the transaction, bp expects to receive net proceeds of roughly $6.0 billion. This figure includes about $0.8 billion related to the prepayment of anticipated future dividend income over the near to medium term on bp’s retained 35% interest, along with other customary financial adjustments.
After accounting for joint venture minority interests totaling approximately $1.8 billion and debt-like obligations of around $0.3 billion, the implied total equity value of Castrol stands at about $8.0 billion. A substantial portion of these minority interests is associated with bp’s holding in the publicly listed Castrol India Limited, which remains outside the scope of full ownership consolidation.
Upon completion, a new joint venture structure will be established, with Stonepeak holding a 65% controlling stake and bp retaining 35%. This minority position enables bp to continue participating in Castrol’s future growth strategy, which builds on a solid operating track record that includes nine consecutive quarters of year-on-year earnings growth. Additionally, following a two-year lock-up period, bp will have the flexibility to monetise its remaining stake, providing optionality depending on market conditions and strategic priorities.
Commenting on the transaction, Carol Howle, interim chief executive officer of bp, described the agreement as a positive outcome for all stakeholders. She noted that the comprehensive strategic review attracted significant interest and culminated in the sale of a majority interest at an attractive valuation. According to Howle, the proceeds materially advance bp’s $20 billion divestment programme, of which more than half has now been completed or announced, and will play a crucial role in strengthening the company’s financial position. She added that the transaction aligns with bp’s broader ambition to reduce operational complexity, focus on integrated downstream assets, and accelerate cash flow generation and shareholder returns.
The transaction is expected to close by the end of 2026, subject to regulatory clearances and standard closing conditions.
From Stonepeak’s perspective, the acquisition represents a strategic investment in a globally recognised lubricants platform. Anthony Borreca, Senior Managing Director and Co-Head of Energy at Stonepeak, highlighted that lubricants are essential to the safe and efficient functioning of vehicles, machinery, and industrial operations worldwide. He emphasised that Castrol’s 126-year heritage, iconic brand, and differentiated product portfolio position it as a market leader with strong customer value. Stonepeak expressed enthusiasm about partnering with Castrol’s management team while continuing to benefit from bp’s guidance as a minority shareholder.
The divestment forms part of bp’s broader $20 billion asset sale programme, with completed and announced transactions now totaling around $11.0 billion. All proceeds from the Castrol sale will be directed toward reducing net debt, supporting bp’s target range of $14–18 billion by the end of 2027. As of the third quarter of 2025, bp’s net debt stood at $26.1 billion. The company has guided for divestment proceeds exceeding $4 billion in 2025, of which $1.7 billion had already been received by the end of the third quarter, with the balance expected before year-end.
bp reaffirmed its commitment to maximising shareholder value by continuously upgrading its portfolio, lowering complexity, maintaining cost discipline, and investing selectively to enhance cash flow and returns. Through these measures, the company aims to become a simpler, more agile, and more profitable organisation.
