BP’s lubricants business, Castrol, has emerged as a potential multibillion-dollar acquisition target, drawing early-stage interest from a mix of strategic and financial bidders, including Reliance Industries, Apollo Global Management, and Lone Star Funds, according to a report by Bloomberg citing sources familiar with the matter.
The UK-based energy major has circulated preliminary information to a broader set of potential buyers, including Brookfield Asset Management and Stonepeak Partners, as it progresses with a strategic review of the Castrol-branded unit. Market sources indicate the business could command a valuation in the range of $8bn to $10bn, though expectations had previously peaked at up to $13bn.
Saudi Aramco is also reportedly evaluating a potential bid, joining the list of high-profile suitors. The process remains in its early stages, with first-round bids expected in the coming weeks. Industry observers suggest prospective consortium formations are possible.
On the financing front, lenders are exploring a debt package of approximately $4bn in value to support potential bids, comprising leveraged loans and high-yield bonds across multiple currencies, including euros and US dollars. Market participants expect the deal to be one of the more significant leveraged financings of 2025, amid a subdued buyout lending environment.
Castrol’s appeal lies in its diverse industrial and automotive lubricant portfolio and emerging exposure to fast-growth segments, including AI data centre cooling technologies. Its operations in high-growth regions, notably India – where its publicly listed subsidiary Castrol India commands a $2.5bn market cap – are seen as particularly attractive to Reliance and Aramco.
The potential divestiture aligns with BP’s broader corporate overhaul under increasing pressure from activist investor Elliott Investment Management, now one of the group’s largest shareholders. While a successful sale would aid BP’s deleveraging efforts, analysts at Jefferies caution that it could also strip the firm of a defensive earnings stream amid weakening commodity markets. Despite potential proceeds, BP’s leverage metrics would remain elevated versus peers.
BP shares were trading up 0.8% in London at mid-morning Thursday, giving the group a market capitalisation of approximately £58bn ($78bn).
