Castrol India shares posted their biggest single-day rise in eight months on March 6 amid buzz of Saudi Aramco considering a potential offer for lubricant assets being sold by BP Plc.
The world’s biggest energy company is studying whether to bid for part or all of the business, which operates under the Castrol brand name, Bloomberg reported on March 5 citing sources.
Aramco could look to combine the Castrol assets with its Valvoline lubricants unit, which it bought in a $2.65 billion deal completed in 2023, the report added. Aramco is particularly interested in Castrol’s operations in fast-growing markets like India, sources told Bloomberg.
At 12:40 pm on March 6, Castrol India shares were trading 11.5% higher at Rs 248 apiece. Its 52-week high is Rs 284 and 52-week low is Rs 162.6. The market capitalisation of the stock is Rs 23,600 crore.
Aramco said last year it’s looking for more refining and chemicals acquisitions in Asia and sees China, India and southeast Asia as its big growth markets. Owning businesses like filling stations and lubricant manufacturers gives oil producers more sway along the energy value chain, while taking them deeper into markets where they sell their crude.
Last month, oil major BP said it is looking at strategic review of its global lubricants business.
"BP is carrying out a strategic review of its Castrol business with the intention of accelerating Castrol’s next phase of value delivery," said the oil major on February 26.
"Castrol is a leading and trusted global lubricants brand, marketing premium products in more than 150 countries and serving customers and consumers in the automotive, marine, industrial and energy sectors. Castrol has significant growth ambitions, including growing its core mobility businesses, expanding participation in industrial lubricants, enhancing its mobility services and diversifying into data centre fluids," said BP.
BP said it may look for stake sale in Castrol to improve its own balance sheet.
"The strategic review of Castrol will consider all options with a focus on value creation. Proceeds from any potential transaction that may arise as a result of the review will be allocated to strengthening bp’s balance sheet," said BP.
The Castrol brand serves customers in more than 150 countries in the automotive, marine, industrial, aerospace and energy production sectors, according to BP’s website. Recently, the brand has expanded into developing liquid cooling technology to help with the issue of overheating at data centers. Castrol is also a widely recognised brand in global sport through marketing partnerships with the NBA, WNBA and motorsports.
Elliott, which has built up a stake worth about £3.7 billion ($4.7 billion) in BP, is demanding that it make drastic cost cuts and divestments to strengthen its future as a standalone company.
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