BP has reached an agreement to sell a 65% shareholding in Castrol to US private equity firm Stonepeak at an enterprise value of $10 billion.
The transaction represents a significant milestone in BP’s commitment to accelerate its strategy, including simplifying the portfolio, strengthening the balance sheet, and focusing the downstream on its leading integrated businesses, the company said in a statement on Wednesday (24 December).
“The transaction is expected to result in total net proceeds to bp of approximately $6 billion, which includes around $0.8 billion for the pre-payment of future dividend income over the short to medium term on BP’s retained 35% stake and other adjustments.
“The implied total equity value of Castrol is $8.0 billion after deducting JV minority interests totaling $1.8 billion, and other debt-like obligations of around $0.3 billion, and subject to customary adjustments. A significant proportion of Castrol JV minority interests relates to the shareholding in the publicly listed Castrol India Limited.”
Upon completion of the transaction, a new joint venture will be incorporated, comprising a 65% Stonepeak and 35% BP ownership. BP said its retained stake provides exposure to Castrol’s growth plan over the coming years, which builds on a strong track record of nine quarters of consecutive year-on-year earnings growth. Following a two-year lock-up period, BP has the option to sell its 35% stake in Castrol.
“Today’s announcement is a very good outcome for all stakeholders. We concluded a thorough strategic review of Castrol, which generated extensive interest and resulted in the sale of a majority interest to Stonepeak,” said Carol Howle, interim CEO of BP.
“And with this, we have now completed or announced over half of our targeted $20 billion divestment programme, with proceeds to significantly strengthen bp’s balance sheet. The sale marks an important milestone in the ongoing delivery of our reset strategy.
“We are reducing complexity, focusing the downstream on our leading integrated businesses, and accelerating delivery of our plan. And we are doing so with increasing intensity – with a continued focus on growing cash flow and returns, and delivering value for our shareholders.”
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