BP just got a big deal done. They are divesting a controlling interest in their motor oil subsidiary, Castrol, to New York-based financial house Stonepeak for $6 billion (£4.4 billion). This landmark transaction is another significant step in BP’s continuing progress to simplify its organization and reduce costs.
BP agreed to sell a controlling 65% stake in Castrol as part of the deal. Castrol is a global leader in manufacturing lubricants for passenger cars, motorcycles and industrial applications. The sale fits with BP’s larger strategy to sell off non-core assets and concentrate on their core integrated businesses.
Carol Howle, BP’s interim chief executive, expressed optimism regarding the transaction, stating that it represents “a very good outcome for all stakeholders.” She underscored the significance of this sale amid BP’s continuing metamorphosis.
“We are reducing complexity, focusing the downstream on our leading integrated businesses, and accelerating delivery of our plan,” – Carol Howle
Howle’s unexpected elevation to interim chief executive comes just three months after the company appointed Albert Manifold as chairman. Her leadership comes in a moment where BP has set a target of $20 billion in divestments by 2027. Following this latest deal and previous asset sales, such as offloading its US onshore wind energy business and its Dutch mobility and convenience arm, BP reports that it is now over halfway toward meeting this ambitious target.
Investment director Russ Mould of AJ Bell said the deal was sweeter for shareholders. To some, he called it “an early Christmas present” for them. That positive reaction perfectly encapsulates the market’s mood towards BP’s recently announced strategy to become a more efficient and profitable operator.
BP just recently been through a huge transition process. Moving from former CEO Bernard Looney, to Murray Auchincloss and now to Carol Howle. The sale of Castrol underscores BP’s commitment to refining its business model and ensuring long-term sustainability within the competitive energy sector.