Mumbai: Castrol India is set for a change in ownership, with New York-based investment firm Stonepeak to acquire a majority stake in the lubricants maker from Britain’s BP as part of a $6-billion global deal.
BP owns 51 per cent of Castrol India, with the remaining 49 per cent held by public shareholders. In line with India’s takeover regulations, Stonepeak, along with Canada’s pension fund CPPI has made an open offer to buy an additional 26 per cent stake from public shareholders at Rs 194 per share, involving an outlay of Rs 4,990 crore, UBS Securities India, the manager to the offer, said. The offer price is marginally higher than Castrol India’s Wednesday closing price of Rs 189.6 on the BSE.
The deal marks a scaling back of BP’s footprint in India, where it has long been one of the largest international energy players. Under the global agreement, BP will sell 65 per cent of Castrol to Stonepeak at an enterprise valuation of $10.1 billion, with an option to divest the remaining 35 per cent after a two-year lock-in. CPPI will invest $1.1 billion as part of the deal.
BP had acquired the 126-year-old Castrol brand from Burmah Castrol in 2000. The deal also covers BP’s minority holdings in Castrol operations across several markets, including India (49 per cent), Vietnam (35 per cent), Saudi Arabia (50 per cent) and Thailand (40 per cent), the oil giant said. However, according to Castrol India’s disclosures to the Indian stock exchanges, Stonepeak will indirectly acquire 51 per cent of the company. The consideration will be paid partly in cash to BP and partly through a share-swap, under which Stonepeak will issue 35 per cent equity shares to BPMH, an indirect subsidiary of BP.
“The transaction contemplates an indirect transfer of 51 per cent equity stake in Castrol India. The offshore consideration – comprising cash and a 35 per cent non-controlling equity interest in the Stonepeak acquiring entity shall be subject to Indian indirect transfer tax framework and tax treaty benefits. The structure is reminiscent of earlier landmark transactions such as Adani Group’s acquisition of Holcim’s indirect holdings in Ambuja Cements and ACC, as well as Vodafone’s acquisition of Hutchison’s Indian telecom business through acquisition of an offshore holding company,” said Deep Chandan, executive director, Katalyst Advisors. Once the deal is completed, BP’s nominee directors will step down from Castrol India’s board, paving the way for Stonepeak, which manages over $80 billion in assets, to appoint its own representatives. The Castrol India acquisition strengthens Stonepeak’s presence in the country, where it has invested in sectors such as data centres. If Stonepeak and CPPI manage to acquire the full 26 per cent stake through the open offer, their combined share in Castrol India will increase to 77 per cent. In that event, the new promoters will be required to dilute their stake to 75 per cent to meet India’s minimum public shareholding norms.
The Castrol stake sale is part of BP’s broader efforts to reshape its business, strip out costs, and strengthen its balance sheet. Earlier, RIL, Saudi Aramco, and private equity firms Apollo Global Management and Lone Star Funds were reported to be among potential suitors for Castrol.Apart from Castrol India, BP’s interests in India span petrochemical technology licensing, oil and gas trading, IT and financial services, and staffing for its global marine fleet. BP also has JVs with RIL including Reliance BP Mobility, which operates Jio-bp fuel outlets, and India Gas Solutions, which sources and markets gas in India.
