BP Sells Stake in Motor Oil Arm Castrol for $6bn
BP has successfully negotiated a $6bn (£4.4bn) agreement to sell a majority stake in its motor oil division, Castrol, to a prominent US investment firm. This strategic move represents a significant step in BP’s ongoing efforts to streamline its operations and concentrate on its core business.
– Ownership Details: BP sold a 65% stake in Castrol, known for producing lubricants for cars, motorcycles, and industrial vehicles, to New York-based Stonepeak.
– Valuation: The deal values Castrol at approximately $10.1bn (£7.5bn), with BP receiving $6bn in cash. This capital infusion will primarily be used to reduce debt and enhance BP’s financial position.
– Retained Stake: BP will maintain a 35% stake in Castrol, a subsidiary it has controlled since 2000.
– Strategic Overhaul: BP regards this sale as a milestone in its plans to revamp its business model and eliminate unnecessary costs. In February, the company announced intentions to divest $20bn (£15bn) worth of assets as part of a strategy to refocus on its core crude oil and gas operations.
Following this transaction, BP claims to be over halfway to achieving its divestment goal, paving the way for a sharpened focus on oil and gas amidst external pressures. This decision aligns with a broader trend, as rivals like Shell and Equinor have similarly adjusted their green energy investment plans. The push to invest in fossil fuels has also been influenced by external calls, including recent remarks from former US President Donald Trump urging a “drill baby drill” approach.
– Leadership Changes: This sale follows BP’s recent announcement of its first female chief executive, Meg O’Neill, who is set to start in April 2026. Her appointment comes only three months after Albert Manifold was named chairman, marking a period of significant leadership transitions.
– Recent Divestments: This transaction is part of a series of divestitures by BP, including its US onshore wind energy business and its Dutch mobility and convenience arm.
Interim CEO Carol Howle emphasized the positive implications of this sale, stating it is a very good outcome for all stakeholders. She noted, We are reducing complexity, focusing the downstream on our leading integrated businesses, and accelerating delivery of our plan.
Investment director Russ Mould from AJ Bell declared the deal an early Christmas present for BP shareholders, highlighting how the substantial proceeds will significantly alleviate BP’s debt burden and facilitate progress toward its $20bn divestment goal by 2027.
On Wednesday morning, BP’s shares opened with gains in response to this news, although they later retraced most of those increases.
This significant sale marks yet another pivotal moment for BP as it continues navigating the complexities of the energy market and aligning its strategy for future growth.