On December 24, 2025, bp said it has agreed to sell a 65% shareholding in Castrol to infrastructure-focused investment firm Stonepeak, valuing the lubricants business at an enterprise value of about $10.1 billion. bp expects total net proceeds of about $6.0 billion, and said the money will be used to reduce net debt as the company accelerates what it calls its “reset strategy.” [1]
The transaction creates a new incorporated joint venture in which Stonepeak will own 65% and bp will retain 35%—a structure designed to let bp benefit from Castrol’s near-term growth plan while keeping “optionality” to monetize the remaining stake later. bp said it may sell its retained 35% after a two-year lock-up period. [2]
A notable third party is also joining the deal: CPP Investments (Canada Pension Plan Investment Board) said it will invest up to $1.05 billion for an indirect, non-controlling interest in Castrol as part of the broader transaction. [3]
Deal snapshot: the key numbers and structure
- Buyer (controlling): Stonepeak (65%) [4]
- Seller/retained stake: bp (35%) in a newly formed joint venture [5]
- Enterprise value: approximately $10.1 billion [6]
- bp net proceeds: approximately $6.0 billion, including ~$0.8 billion related to a pre-payment of future dividend income on bp’s retained stake (plus other adjustments) [7]
- Implied equity value (bp disclosure):$8.0 billion, after deducting JV minority interests of $1.8 billion and ~$0.3 billion of other debt-like obligations (subject to customary adjustments) [8]
- Valuation multiple: implied EV / LTM EBITDA of ~8.6x [9]
- Expected close: by end of 2026, subject to regulatory approvals [10]
- CPP Investments participation: up to $1.05 billion invested alongside Stonepeak [11]
Why bp is selling Castrol now
bp is positioning the Castrol transaction as a cornerstone move in its push to simplify the company and strengthen its balance sheet.
In its announcement, bp said the sale accelerates delivery of its “reset strategy” and advances its focus on the downstream business. Interim CEO Carol Howle framed the deal as a way to “realise value” while still benefiting from Castrol’s momentum, adding that bp is “reducing complexity” and “focusing the downstream on our leading integrated businesses.” [12]
Just as important: bp tied the proceeds directly to debt reduction targets. The company said it will allocate proceeds toward reducing net debt, with a stated target of $14–$18 billion net debt by end-2027. bp also disclosed that net debt was $26.1 billion at the end of 3Q 2025. [13]
From a market-news perspective, Reuters reported that the Castrol sale is central to bp’s broader plan to divest $20 billion of assets by 2027, a strategy that has been closely watched as bp rebalances priorities and responds to investor pressure while trying to improve profitability. [14]
What bp keeps—and what it gives up
The headline is a sale, but the fine print shows a carefully staged transition.
bp keeps exposure through a 35% stake
bp will retain 35% in the new joint venture, which it said provides exposure to Castrol’s growth plan and “optionality” for future value realization. [15]
A future exit path is built in
After a two-year lock-up, bp says it has the option to sell its remaining 35% stake. That’s a critical detail for investors reading this as a potential multi-step monetization rather than a one-and-done divestment. [16]
Distributions may be back-ended for bp
bp also noted an important near-term economic reality: after the deal closes, it expects to treat the retained stake as an equity-accounted investment and does not expect to recognize earnings or receive a dividend in the short to medium term, because Stonepeak has a preference on distributions. [17]
Governance: bp gets board seats
bp said it will appoint two board seats to the new joint venture at closing—evidence that it intends to remain involved in governance even as a minority owner. [18]
Why Stonepeak wants Castrol
Stonepeak is best known for infrastructure and real-asset investing, but it’s presenting Castrol as a “mission-critical” industrial platform with durable demand drivers.
In Stonepeak’s announcement, the firm emphasized the essential role lubricants play across vehicles, machinery, and industrial processes, pointing to Castrol’s brand strength and product differentiation. Stonepeak also highlighted Castrol’s long operating history—126 years—and global reach. [19]
Castrol’s own leadership signaled continuity and investment capacity. Michelle Jou, Global CEO of Castrol, said Stonepeak’s “capital support” and energy-sector experience would help Castrol “innovate and grow,” positioning the deal as a growth partnership rather than a restructuring. [20]
Stonepeak also disclosed deal advisors, naming multiple law firms and stating UBS served as financial advisor to Stonepeak. [21]
What Castrol looks like as a standalone business
For many consumers, Castrol is a familiar name on the auto-service shelf. For industrial buyers, it’s a global supplier embedded in manufacturing and heavy industry.
According to the Stonepeak and CPP Investments announcements, Castrol:
- manufactures and markets engine oils, industrial fluids, and greases, [22]
- operates through ~20 blending plants plus 100+ third-party facilities and warehouses, [23]
- sells across ~150 countries, [24]
- and has supplied products used in high-profile applications ranging from early jet-age aviation and the Concorde to space missions and motorsport. [25]
CPP Investments also emphasized emerging use-cases—highlighting growth potential tied to electric vehicles and data centres, a theme increasingly central to industrial “picks-and-shovels” investing. [26]
The Castrol India angle: why a separate tender offer matters
One of the most immediate market reactions on December 24 came not in London or New York, but in India.
Castrol India shares jumped sharply on the news. Business Standard reported the stock rose as much as 8.8% intraday to ₹202.4, and was still up around 7–8% in early afternoon trade, with the move framed as the steepest intraday gain since early June. [27]
Behind that reaction is an important structural detail: bp disclosed that a “significant proportion” of Castrol joint venture minority interests relate to its stake in publicly listed Castrol India Limited. [28]
Stonepeak’s announcement adds a key regulatory step for Indian shareholders: it referenced a mandatory tender offer (MTO) to Castrol India’s public shareholders under the Indian takeover code, published by UBS Securities India Private Limited as manager. Stonepeak said the MTO will proceed only upon completion of the broader Castrol transaction. [29]
CPP Investments repeated the same timing and condition, underscoring that the Indian tender offer is linked—but not immediate—because the overall deal is not expected to close until end-2026 (subject to approvals). [30]
Understanding the $10.1B valuation: enterprise value vs. equity value
The Castrol deal has generated multiple valuation numbers in reporting, and it’s easy to mix them up. bp’s own breakdown helps reconcile what investors are seeing:
- Enterprise value (~$10.1B) represents the value of the overall business including debt-like items. [31]
- bp then describes an implied total equity value of $8.0B, after deducting JV minority interests (~$1.8B) and other debt-like obligations (~$0.3B) (subject to customary adjustments). [32]
This matters because Castrol is not a perfectly “clean” carve-out: it includes various minority interests across jurisdictions. bp explicitly noted minority interests “principally in India (49%), Vietnam (35%), Saudi Arabia (50%), Thailand (40%) and other jurisdictions.” [33]
bp also said the implied EV/LTM EBITDA multiple is ~8.6x, a metric deal-watchers commonly use to compare transactions across the energy and industrial supply chain. [34]
A deal unfolding amid bp leadership and strategy change
The Castrol divestment lands at a moment of leadership and strategic transition for bp.
Reuters reported that bp began a strategic review of Castrol earlier in 2025 and that the sale process gained momentum after bp said in February it had put the lubricants business under review as part of a broader strategic shift. Reuters also reported that the process attracted interest from other bidders, including One Rock, and noted that the transaction fits into bp’s multi-year effort to reshape its portfolio and improve shareholder returns. [35]
Reuters added that bp recently named Meg O’Neill (then at Woodside Energy) as its next CEO as the company works to lift profitability and compete more effectively with global peers. [36]
What happens next: approvals, closing timeline, and a two-year clock
Even though the agreement is signed, the market should treat this as a multi-stage story rather than a finished event.
- Regulatory approvals must be obtained across multiple jurisdictions. [37]
- The companies expect the transaction to close by end of 2026, meaning there is a long runway where conditions (economic, political, and regulatory) can influence timing. [38]
- Only after closing does the two-year lock-up start for bp’s retained 35% stake—setting up a potential future exit window beyond that period. [39]
- In India, the referenced mandatory tender offer is also conditioned on completion of the larger transaction. [40]
Why this Castrol sale is bigger than a divestment headline
At one level, this is straightforward: bp is selling a majority stake in a mature but globally scaled lubricants business to raise cash and reduce debt.
At another level, it reflects how energy majors are increasingly trying to do three things at once:
- Generate near-term balance-sheet relief (bp explicitly ties proceeds to net debt reduction). [41]
- Keep upside exposure through minority ownership and governance (35% retained stake, board seats). [42]
- Bring in capital partners that view industrial brands like Castrol as long-duration infrastructure-like assets, with growth narratives tied to electrification, industrial digitization, and data-centre buildouts. [43]
For readers tracking bp’s reset strategy and portfolio moves into 2026, the Castrol–Stonepeak deal is likely to remain a central reference point—both for how quickly bp can execute asset sales and for how it balances debt reduction with retained exposure to profitable downstream-adjacent businesses. [44]
References
1. www.investegate.co.uk, 2. www.investegate.co.uk, 3. www.newswire.ca, 4. www.investegate.co.uk, 5. www.investegate.co.uk, 6. www.investegate.co.uk, 7. www.investegate.co.uk, 8. www.investegate.co.uk, 9. www.investegate.co.uk, 10. www.investegate.co.uk, 11. www.newswire.ca, 12. www.investegate.co.uk, 13. www.investegate.co.uk, 14. www.reuters.com, 15. www.investegate.co.uk, 16. www.investegate.co.uk, 17. www.investegate.co.uk, 18. www.investegate.co.uk, 19. stonepeak.com, 20. stonepeak.com, 21. stonepeak.com, 22. stonepeak.com, 23. stonepeak.com, 24. stonepeak.com, 25. stonepeak.com, 26. www.newswire.ca, 27. www.business-standard.com, 28. www.investegate.co.uk, 29. stonepeak.com, 30. www.newswire.ca, 31. www.investegate.co.uk, 32. www.investegate.co.uk, 33. www.investegate.co.uk, 34. www.investegate.co.uk, 35. www.reuters.com, 36. www.reuters.com, 37. www.investegate.co.uk, 38. www.investegate.co.uk, 39. www.investegate.co.uk, 40. stonepeak.com, 41. www.investegate.co.uk, 42. www.investegate.co.uk, 43. stonepeak.com, 44. www.investegate.co.uk
