BP has completed the sale of a majority stake in Castrol, securing a $6bn (£4.4bn) cash injection as the oil major intensifies efforts to reduce debt and reshape its business ahead of a long-awaited strategic overhaul.
The energy group agreed in December last year to sell a 65 per cent stake in the UK-headquartered lubricants business to US investment firm Stonepeak, retaining the remaining 35 per cent through a new joint venture.
BP said the proceeds would strengthen its balance sheet and support its continuing debt-reduction programme. Net debt stood at $13.9bn (£10.2bn) at the end of September, according to its third-quarter update last week.
The transaction represents a significant step in chief executive Meg O’Neill’s efforts to simplify the group, cut costs and release capital from assets outside its core priorities.
“This deal brings meaningful cash proceeds to BP today while retaining a valuable stake in Castrol’s future growth,” O’Neill said.
“Castrol’s deep expertise and innovation span everything from advanced mobility solutions to data centre cooling.
“It will now have greater independence to accelerate its next phase of delivery.”
Castrol, which employs more than 6,000 people worldwide, supplies lubricants for motorists, commercial vehicles and industrial customers, including manufacturers. Its operations also extend into newer applications such as cooling technology for data centres, an increasingly important market as demand for computing infrastructure expands.
Stonepeak, the New York-based investment firm, has appointed Ben van Beurden, the former Shell chief executive, as chairman of Castrol’s board.
Michelle Jou, Castrol’s chief executive, said the business was entering its next phase with established brands and a clear growth strategy.
“Castrol begins the next part of its journey from a position of real strength, with trusted brands, strong customer relationships, talented colleagues and a clear strategy for growth.”
For BP, the deal provides immediate financial firepower while allowing it to retain exposure to Castrol’s future performance through its minority stake.
O’Neill, who took over as chief executive in April, is expected to outline her strategy for the wider group in December. Investors will be watching for further details on asset disposals, cost reductions and capital allocation as BP seeks to strengthen its finances and establish a clearer direction for the business.
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