BP’s $8bn Castrol Sale Attracts Bid from Motor Fuel Group Owner

Clayton Dubilier & Rice joins global race for lubricant giant amid mounting pressure on BP

Private Equity Firm Eyes BP's Castrol Division

Clayton Dubilier & Rice (CD&R)—owner of Motor Fuel Group and Morrisons—has emerged as a key bidder in the ongoing auction for BP’s Castrol lubricants business, which is valued at around $8 billion (£5.8 billion).

The bid comes at a time when BP is under growing pressure from activist investors, including Elliott Management, to cut costs and boost shareholder returns.

CD&R Ties to BP Draw Attention

CD&R’s involvement has raised eyebrows due to the presence of Helge Lund, BP’s current chairman, who also serves as an operating advisor to CD&R.

However, sources close to the process say that Lund is not involved in the firm’s bid for Castrol and is expected to step down from BP within the next 12 months.

Global Bidders Join the Race

The auction, launched earlier this year, has attracted a wide range of interest from both strategic and financial investors. According to Bloomberg, other confirmed bidders include:

• Apollo Global Management
• Lone Star Funds
• Reliance Industries (India)

The strong interest reflects Castrol’s global brand recognition and significant footprint in the automotive and industrial lubricants market.

Turbulent Times for BP

The sale of Castrol is taking place during a challenging period for BP, which is facing internal and external pressures:

• Elliott Management is demanding operational reforms and greater efficiency
• Recent media speculation falsely suggested that Shell was considering a BP takeover, underscoring BP’s vulnerability in the current climate
• BP is currently seeking a replacement for Helge Lund, with former Centrica CEO Sam Laidlaw and ex-BHP chairman Ken MacKenzie having reportedly withdrawn from the selection process

Castrol: A Strategic Asset Up for Grabs

Castrol is a flagship brand in BP’s portfolio and is seen as a non-core asset amid BP’s broader shift towards renewable energy and lower carbon solutions. Selling the business could help BP:

• Streamline its operations
• Raise significant capital
• Respond to shareholder calls for improved returns and focus

What’s Next?

The sale process is expected to continue over the coming months, with a potential deal providing a much-needed financial and strategic reset for BP.

A spokesperson for CD&R declined to comment, while BP has also yet to issue an official response.

Summary

• Motor Fuel Group owner CD&R joins bid for BP’s $8bn Castrol unit
• BP chairman Helge Lund linked to CD&R, but not involved in the deal
• Other bidders include Apollo, Lone Star, and Reliance Industries
• BP facing investor pressure and leadership changes
• Castrol sale aligns with BP’s strategy to focus on low-carbon growth

Sources: (SKY.com, ChatGPT)