BP agreed to sell a 65% stake in its Castrol lubricants division to U.S. infrastructure investor Stonepeak, in a deal that values the century-old business at U.S.$10.1 billion including debt. The transaction is BP’s largest divestiture to date and a major chunk of its plan to raise $20 billion by 2027.
Under the agreement, BP will retain a 35% holding in Castrol through a joint venture, with the option to sell its remaining stake after a two-year lock-up period. The deal is expected to close by the end of 2026, subject to regulatory approvals.
BP said it would use the entire proceeds – around $6 billion – to pay down debt, which was $26.1 billion at the end of the third quarter. The company added that approximately $800 million of the proceeds relate to future dividend payments that have been accelerated as part of the transaction, with no expectation of additional payments in the short to medium term.
The sale process for Castrol began in February, during a period of growing pressure from activist hedge fund Elliott Management to cut costs and deleverage. With this transaction, BP said it has now completed or announced more than half of its targeted $20 billion divestment program.
“This marks an important milestone in the ongoing delivery of our reset strategy,” said interim chief executive Carol Howle, adding that the proceeds would significantly strengthen BP’s balance sheet.
Stonepeak manages about $80 billion in assets and is groing energy infrastructure investments. Earlier this year, the New York-based investor agreed to buy a 40% stake in a Louisiana LNG project from Woodside for $5.7 billion.