LONDON / NEW YORK — December 25, 2025 — BP has agreed to sell a 65% stake in Castrol to Stonepeak in a transaction valuing the lubricants business at about $10.1 billion, marking one of the oil major’s biggest moves yet in its multi‑year effort to simplify operations, cut debt, and sharpen its strategic focus. [1]
While the headline announcement landed on December 24, the story continued to develop on December 25 as attention shifted to what the deal means for BP’s balance sheet, Stonepeak’s bet on a cash‑generative industrial brand, and a required open offer for Castrol India that could reshape the listed subsidiary’s ownership. [2]
The Castrol deal in one sentence
BP is selling control of Castrol to Stonepeak for roughly $6 billion in total net proceeds, keeping a 35% minority stake in a new joint venture—with the option to exit later—while a Canadian pension investor, CPP Investments, backs the transaction with up to $1.05 billion for an indirect minority holding. [3]
Deal structure: what BP gets, what Stonepeak gets, and what happens next
According to BP’s regulatory announcement, the transaction values Castrol at an enterprise value of $10.1 billion, implying an EV/LTM EBITDA multiple of around 8.6x. BP expects total net proceeds of about $6.0 billion, which includes roughly $0.8 billion tied to a pre‑payment of future dividend income (over the short to medium term) related to BP’s retained stake, plus other adjustments. [4]
The joint venture will be owned 65% by Stonepeak and 35% by BP, and the deal is expected to close by the end of 2026, subject to customary regulatory approvals. After a two‑year lock‑up, BP has the option to sell its remaining 35% stake. [5]
A notable nuance: BP said it expects to treat its retained interest as an equity‑accounted investment after closing and does not expect to recognize earnings or receive a dividend in the short to medium term, noting that Stonepeak has a preference on distributions. That detail helps explain why some analysts are focused not only on headline proceeds, but also on medium‑term cash flow dynamics. [6]
Why BP is selling Castrol now: debt, divestments, and a “reset strategy”
BP has framed the Castrol sale as a milestone in its plan to simplify the portfolio and strengthen the balance sheet. In its filing, BP reiterated that proceeds from the transaction will be used to reduce net debt toward a target range of $14–$18 billion by end‑2027, from $26.1 billion at the end of 3Q 2025. [7]
The company also said the Castrol sale is part of its $20 billion divestment program, bringing “completed and announced” divestment proceeds to around $11.0 billion to date. [8]
In comments included in BP’s regulatory release, interim CEO Carol Howle said the review process drew “extensive interest” and argued the transaction “allows us to realise value,” while continuing to participate in Castrol’s momentum via the retained minority stake. [9]
The deal also lands amid leadership and strategy changes at BP that have been closely watched by investors. Media coverage has pointed to a broader effort to reduce “complexity” and respond to shareholder pressure for improved returns and a clearer strategic direction. [10]
Why Stonepeak wants Castrol: “infrastructure-style” cash flows and industrial durability
Stonepeak, which describes itself as an infrastructure and real‑assets specialist, is positioning Castrol as a mission‑critical business embedded in the industrial economy—exactly the kind of asset private capital has increasingly targeted for long‑duration, relatively defensive returns.
In Stonepeak’s announcement, the firm highlighted Castrol’s global scale: products sold across around 150 countries, supported by roughly 20 blending plants and more than 100 third‑party facilities and warehouses. [11]
Stonepeak’s Anthony Borreca described lubricants as “mission‑critical” to vehicles, machines and industrial processes, underscoring the view that—even as the energy transition reshapes fuels—many parts of the global economy still rely on specialized fluids and grease for reliability and performance. [12]
Castrol’s pitch is not limited to traditional engine oils. CPP Investments, which is investing alongside Stonepeak, explicitly pointed to growth opportunities in “emerging applications,” including electric vehicles and data centres—a sign that buyers are underwriting the brand’s evolution beyond conventional internal combustion demand. [13]
Analyst debate: great price or costly sacrifice?
Not everyone is convinced that selling a mature, cash‑generative lubricants unit is an obvious win for BP.
Reuters reported that RBC analysts questioned the strategic rationale of selling what they described as a “highly cash generative” and “low capital intensity” business, warning that the move could be detrimental to dividend sustainability and earnings quality over time—even if it helps reduce debt in the near term. [14]
Markets digested the news with a mix of initial optimism and caution. Reuters noted BP shares rose after the announcement before paring gains, reflecting that the deal solves some balance‑sheet concerns while raising longer‑term questions about earnings mix and cash flow stability. [15]
Castrol India: what changed on December 25
A major follow‑through development involves Castrol India Limited, the publicly listed subsidiary that sits inside Castrol’s international structure.
Under India’s takeover rules, acquiring 25% or more of a listed company triggers a mandatory open offer to buy at least an additional 26% from public shareholders. Following the global agreement, Stonepeak and CPP Investments moved to launch an open offer for up to 26% of Castrol’s Indian unit at ₹194.04 per share, a 2.5% premium to the previous close, according to a Reuters report citing an exchange filing. [16]
The same Reuters item noted the deal gives Stonepeak control of Castrol’s entire 51% stake in Castrol India, with the open offer providing a route—if fully subscribed—to lift ownership further. [17]
Indian media coverage on December 25 emphasized the local stakes: BP currently owns 51% of Castrol India, with the remainder held by public shareholders; the open offer could raise Stonepeak/CPP’s combined holding to as much as 77% if fully taken up, which would then interact with India’s minimum public shareholding requirements. [18]
Both Stonepeak and CPP Investments have stated that the Indian tender/open offer process is tied to completion of the broader Castrol transaction—meaning the timeline and regulatory clearances of the global deal will be closely watched by Castrol India investors as well. [19]
What happens between now and closing
With an expected close by end‑2026, several milestones will likely matter to investors, customers, and employees:
- Regulatory approvals across jurisdictions before completion. [20]
- Governance of the new joint venture, including BP’s stated plan to appoint two board seats after closing. [21]
- Distribution economics and the practical impact of Stonepeak’s preference on distributions, which BP says means it does not expect dividends or earnings recognition in the short to medium term from its retained stake. [22]
- The two‑year lock‑up after completion, after which BP can choose whether to sell its remaining 35% interest. [23]
- The Castrol India open offer process in parallel, which is required under Indian takeover regulations once the relevant control thresholds are crossed. [24]
The bigger picture: private capital moves deeper into industrial brands
A December 25 analysis piece noted the unusual pairing of a household industrial brand with an investor better known for “behind‑the‑scenes” infrastructure stakes—an example of how private capital is pushing further into parts of the economy that consumers rely on daily but rarely notice. [25]
That narrative also aligns with a point raised in Reuters reporting: private equity firms have built up significant “dry powder,” and divestments by large corporates seeking sharper focus have become fertile ground for large, standalone transactions. [26]
Bottom line
For BP, the Castrol sale is about turning a high‑profile asset into immediate balance‑sheet firepower, accelerating a divestment program and reinforcing a strategy reset that prioritizes simplification and debt reduction. [27]
For Stonepeak and CPP Investments, it is a bet that a century‑old lubricants brand—already global in scale—can keep generating durable cash flows while finding new growth vectors in areas like EV fluids and data‑center cooling. [28]
And for investors in Castrol India, December 25 brought the clearest near‑term catalyst: a mandatory open offer at ₹194.04, setting the stage for a potentially significant ownership shift once the global transaction clears its final hurdles. [29]
References
1. www.lse.co.uk, 2. www.investing.com, 3. markets.ft.com, 4. www.lse.co.uk, 5. www.lse.co.uk, 6. www.lse.co.uk, 7. www.lse.co.uk, 8. www.lse.co.uk, 9. www.lse.co.uk, 10. www.theguardian.com, 11. stonepeak.com, 12. stonepeak.com, 13. www.cppinvestments.com, 14. www.reuters.com, 15. www.reuters.com, 16. www.investing.com, 17. www.investing.com, 18. timesofindia.indiatimes.com, 19. www.cppinvestments.com, 20. markets.ft.com, 21. www.lse.co.uk, 22. www.lse.co.uk, 23. www.lse.co.uk, 24. www.investing.com, 25. www.euronews.com, 26. www.reuters.com, 27. markets.ft.com, 28. www.cppinvestments.com, 29. www.investing.com
