BP has agreed to sell a majority stake in its $10bn (£7.4bn) lubricants business Castrol to the US investment firm Stonepeak, as the new chair, Albert Manifold, rapidly reshapes the under-pressure oil and gas company.
Stonepeak will acquire a 65% stake in Castrol, in a deal that values the division at $10.1bn including its debt. The deal, which will see BP retain a 35% stake in the business through a joint venture, is expected to close at the end of next year, the company said on Wednesday.
It marks the latest step in BP’s push to sell $20bn in assets, as it has faced pressure from the activist US hedge fund Elliott Investment Management to cut costs and reduce debt.
BP said it would use the $6bn in proceeds from the deal to pay down its own debt, which stood at $26.1bn at the end of its latest quarter.
Carol Howle, the interim BP chief executive, said: “With this, we have now completed or announced over half of our targeted $20bn divestment programme, with proceeds to significantly strengthen BP’s balance sheet.
“The sale marks an important milestone in the ongoing delivery of our reset strategy. We are reducing complexity, focusing the downstream on our leading integrated businesses and accelerating delivery of our plan.”
It comes as BP’s new chair oversees a radical overhaul of its strategy after a failed attempt to pivot to renewable energy under his predecessor.
Last week, the company made the surprise announcement that it was replacing its chief executive, Murray Auchincloss, after less than two years in the top job. He will be replaced by Meg O’Neill, the chief executive of Woodside Energy, in April, with Howle taking charge in the interim.
In October, Manifold, the former chief executive of the building materials company CRH, became chair of the FTSE 100 group. He said last week, on O’Neill’s appointment, that she would help BP become a “simpler, leaner and more profitable company”.
BP began the sale process for Castrol in February, when Auchincloss announced a strategic reset, with a stronger focus on oil and gas and promising to cut costs and reduce debt.
The Castrol business includes lubricants for the auto and industrial sectors, and has been developing liquid cooling fluids for datacentres.
BP’s continued stake in the business gives it exposure to Castrol’s “growth plan”, it said. The company has the option to sell its stake after a two-year lock-up period.
Shares rose 0.3% in early trading on Wednesday, and are up by about 6% in the year to date.
