BP has reached an agreement to sell a 65 percent shareholding in its lubricants business Castrol to global investment firm Stonepeak at an enterprise value of $10.1 billion. The deal implies an EV to last twelve months EBITDA multiple of around 8.6x, underscoring Castrol’s strong market position and future growth potential.
The transaction marks a major milestone in bp’s strategy reset, aimed at simplifying its portfolio, strengthening the balance sheet, and sharpening focus on its leading integrated downstream businesses.
Deal Structure and Valuation
Under the terms of the agreement, bp expects to receive total net proceeds of approximately $6.0 billion. This figure includes around $0.8 billion related to the pre payment of future dividend income over the short to medium term on bp’s retained 35 percent stake, along with other customary adjustments.
The implied total equity value of Castrol stands at $8.0 billion after deducting joint venture minority interests of $1.8 billion and other debt like obligations of around $0.3 billion. A significant portion of the joint venture minority interests is linked to Castrol India Limited, which is publicly listed.
Following completion, a new joint venture will be incorporated, with Stonepeak holding 65 percent and bp retaining a 35 percent ownership stake. bp’s continued participation allows it to benefit from Castrol’s growth strategy, which is supported by a track record of nine consecutive quarters of year on year earnings growth. After a two year lock up period, bp will have the option to sell its remaining stake.
Strategic Impact for bp
The Castrol sale is a key step in bp’s previously announced $20 billion divestment programme. With this transaction, bp has completed or announced around $11.0 billion in divestment proceeds to date, representing more than half of the targeted total.
All proceeds from the Castrol transaction will be directed toward reducing net debt, supporting bp’s goal of reaching a net debt range of $14 billion to $18 billion by the end of 2027. At the end of the third quarter of 2025, bp’s net debt stood at $26.1 billion.
For 2025, bp has guided for divestment proceeds of over $4 billion. As of the third quarter 2025 results, $1.7 billion had already been received, with the remainder expected by year end 2025.
bp’s interim chief executive Carol Howle said the agreement followed a thorough strategic review that generated strong interest in Castrol. According to bp, the sale enables the company to realise value for shareholders while continuing to participate in Castrol’s growth through a retained minority stake. The deal also supports bp’s broader reset strategy by reducing complexity, strengthening cash flow, and improving returns.
Stonepeak’s Investment Rationale
Stonepeak views lubricants as a mission critical product category essential to the efficient operation of vehicles, machinery, and industrial processes worldwide. Castrol’s 126 year heritage, global brand recognition, and differentiated product portfolio were key factors behind the investment decision.
Stonepeak said it plans to support Castrol’s continued growth by working closely with the company’s management team, while also benefiting from bp’s ongoing involvement as a minority shareholder.