BP Sells 65% of Castrol to Stonepeak in $10B Deal

Market move and deal snapshot

BP sells 65% of Castrol to Stonepeak in a $10B deal on Dec. 24, 2025 that values the lubricants business at about $10.1 billion on an enterprise-value basis and is expected to close by the end of 2026, subject to regulatory approvals. The BP Castrol sale gives Stonepeak control while BP retains 35% in a new joint venture, and BP shares rose more than 1% early in London trading before drifting back toward flat as investors weighed balance-sheet relief against the loss of a steadier cash flow stream.

Castrol is a global consumer and industrial brand whose earnings are typically less volatile than upstream oil and gas. Selling a majority interest is therefore a clear portfolio pivot, converting part of that stability into cash today.

How much BP gets and where the money goes

BP said the transaction should deliver about $6.0 billion of total net proceeds, including roughly $0.8 billion in accelerated dividend payments. The company has said it will use the cash to reduce debt as it targets cutting net debt from about $26 billion to a $14–18 billion range by the end of 2027.

Lower leverage can support credit metrics and reduce refinancing risk, but it also raises the bar for what replaces the divested cash flow. Investors will focus on whether BP can sustain distributions through a weaker oil-price tape once Castrol’s contribution is smaller, and whether buybacks remain paced to free cash flow rather than financial engineering.

What Stonepeak is buying

Stonepeak is acquiring a lubricants franchise spanning consumer automotive, commercial fleets, marine, and industrial end markets. Castrol manufactures and markets engine oils, industrial fluids, and greases through about 20 blending plants and more than 100 third-party facilities and warehouses, distributing products across roughly 150 countries.

Those characteristics help explain private-capital interest. Lubricants demand is tied to the installed base of vehicles and machines that need ongoing maintenance, creating recurring volumes and room to lift margins through premium products and service-led contracts.

Deal structure and a second cornerstone investor

After closing, the joint venture will be owned 65% by Stonepeak and 35% by BP. BP’s retained stake comes with a defined path: after a two-year lock-in period, BP can choose to sell its remaining interest, giving it another potential source of proceeds later in the decade.

Canada Pension Plan Investment Board is expected to invest up to $1.05 billion in support of the transaction, giving it an indirect stake in Castrol. Separately, the deal sets up a mandatory tender offer process for public shareholders of Castrol India, which is expected to proceed only after the main transaction completes.

How valuation will be debated

The headline enterprise value is about $10.1 billion, but the market will parse what that implies after minority interests and debt-like obligations. Some analysts estimate the adjusted value is closer to about $8 billion once those items are netted out.

Even so, the headline price is likely to be read as constructive for big-ticket corporate carve-outs. It suggests scaled, defensible industrial cash flows can still command large valuations, which can support expectations for further asset sales across the sector in 2026.

What it means for BP and the market

For BP, the deal advances its $20 billion divestment target for 2024–2027 and lifts the total of completed and announced divestments to around $11 billion, leaving more sales to execute to reach the goal. The transaction also fits a broader pivot toward simplifying the portfolio and focusing more tightly on core oil and gas.

For equity investors, the trade-off is straightforward: debt comes down, but the group may become more sensitive to oil and gas swings with less contribution from a lower-volatility unit. For credit investors, the direction is generally supportive if proceeds flow directly to deleveraging. For the wider market, the deal underscores how private capital is positioning to buy established brands when corporates want cash and focus.

What to watch next

Watch the closing timetable and any regulatory conditions ahead of the end-of-2026 target. Track the pace of net-debt reduction toward the $14–18 billion range by the end of 2027. Then watch what BP does with its 35% stake once the two-year lock-up expires.

Tredu’s view is that Stonepeak to buy 65% in a $10B deal sets a clear reference point for similar transactions, while BP is betting that lower debt and sharper focus will matter more than holding a full stake in Castrol.