On May 28, Bloomberg reported that BP Plc (NYSE:BP) is considering selling its Castrol lubricant business as part of an ongoing strategic review, citing internal sources. The report states that energy companies such as India’s Reliance Industries Ltd., along with private equity and investment firms including Apollo Global Management Inc. (NYSE:APO), Lone Star Funds, Brookfield Asset Management Ltd. (NYSE:BAM), and Stonepeak Partners, could emerge as potential suitors.
The Castrol business manufactures lubricants for automobiles and various industries. The asset has drawn particular interest due to its strong exposure to the fast-growing Indian market.
However, these developments are not new or surprising, as discussions have been going on for some past months.
In March, Bloomberg had reported that Saudi Arabian oil giant Saudi Aramco was considering acquiring part or all of BP’s Castrol unit. These new potential buyers are expected to participate in the bidding process alongside Aramco. According to Bloomberg estimates, the Castrol assets could fetch as much as $10 billion. BP’s Mumbai-listed subsidiary, Castrol India Ltd., currently has a market capitalization of approximately $2.5 billion.
Before that, on February 26, 2025, BP management unveiled a strategic plan to divest around $20 billion in assets by the end of 2027. The Castrol lubricants business was among the first to undergo review. The plan aims to sharpen the company’s focus on its core operations while reversing the earlier plan to scale back investment in low-carbon energy. As part of this strategy, BP also reduced its share buybacks to between $750 million and $1 billion per quarter, down from $1.75 billion previously.
BP’s strategic shift follows growing pressure from activist investor Elliott Investment Management, which disclosed a stake of over 5% in the company in April. Elliott is compelling BP to generate $20 billion in annual free cash flow by 2027, cut costs, and divest non-core assets.
While the process remains in its early stages and none of the involved parties have confirmed details, Bloomberg estimates that it could be several weeks before initial bids are submitted.
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