Big Law lines up on BP's $10bn Castrol deal

BP has agreed to sell a 65% stake in its Castrol lubricants business to private capital firm Stonepeak for $6 billion, with several Big Law firms advising on the deal, including Freshfields, Simpson Thacher, DLA Piper, Paul Weiss and Latham & Watkins.

The sale will be achieved using a newly formed joint venture with BP retaining exposure to growth through its 35% stake. The deal is expected to be completed by the end of 2026.

Strategic reset

BP said the net proceeds will be used to reduce debt and that the transaction will significantly strengthen its balance sheet, while advancing its strategy to focus on its core businesses.

Carol Howle, interim CEO at BP, said: "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."

The transaction forms part of a broader programme to simplify the group’s portfolio, with BP continuing to divest assets considered non-core while retaining exposure where it sees long-term value.

Platform asset

For NY-based Stonepeak, Castrol represents a platform asset with global scale. Castrol is one of the largest lubricant providers globally, supplying consumer automotive, commercial and industrial markets across 150 countries.

Anthony Borreca, senior managing director and co-head of energy at Stonepeak, said: "Castrol’s 126-year heritage has created a leading market position, an iconic brand, and a portfolio of differentiated products that deliver meaningful value to its customers."

As part of the deal, Canada Pension Plan Investment Board will invest up to about $1 billion in support of the transaction, resulting in an indirect stake in Castrol.

Advising

Freshfields is advising BP, with a team led by London M&A partners Samira Afrasiabi and Rebecca Ward, tax partner May Smith and IP partner David Brooks.

Simpson Thacher and DLA Piper are acting for Stonepeak, with Paul Weiss advising on the financing aspects.

Simpson Thacher’s deal team includes London M&A partner Paul Foote, London energy and infrastructure partners Amy Mahon and Eleanor Milne, and Tokyo-based partner Jonathan Stradling.

The Paul Weiss team is led by US corporate partners Eric Wedel, Matthew Leist and Caroline Epstein, and includes London office co-head Neel Sachdev.

Latham & Watkins is also involved, advising the financing parties.