Stonepeak and Canada Pension Plan Investment Board (CPPIB) have launched an open offer to acquire a 26% stake in Castrol India Ltd., marking a significant development in the Indian lubricants market. The consortium's strategic move follows BP's agreement to sell its majority stake in the global Castrol business and triggers mandatory regulatory requirements under SEBI's takeover regulations.

Open Offer Structure and Pricing

The consortium has structured their acquisition offer with specific parameters designed to provide shareholders with a premium exit opportunity:

The offer price represents a premium to recent trading levels, with Castrol India shares trading at ₹191.40 on the BSE following the announcement.

Parent Company Divestment Transaction

The open offer follows BP's strategic divestment announced on December 24, where the British energy giant agreed to sell a 65% stake in its Castrol lubricants business to Stonepeak for approximately $6 billion. The transaction values the iconic Castrol unit at about $10.10 billion including debt, with CPPIB investing up to $1.05 billion for an indirect stake.

BP retained a 35% stake in Castrol, providing continued exposure to the lubricant maker's growth plan while maintaining optionality for future value realization.

Regulatory Compliance and Future Ownership

Under SEBI's takeover regulations, acquisition of 25% or more in a listed company triggers a mandatory open offer to purchase at least an additional 26% from public shareholders. Castrol Ltd currently holds 51% of the equity share capital of Castrol India. If the open offer succeeds completely, the new owners will control 77% of Castrol India.

Strategic Context and BP's Asset Sale Program

The divestment forms part of BP's targeted $20 billion asset sale program through 2027, aimed at bolstering financial resilience amid underperformance in some segments and activist investor pressure. BP stated that the transaction "accelerates delivery of BP's reset strategy, will significantly strengthen its balance sheet, and advances strategy to focus on the downstream."

Current Market Position

Castrol India operates in the chemicals sector with a market capitalization of ₹18,966.40 crore, positioning it in the mid-cap category. The company's diverse shareholding structure includes institutional investors like LIC and Singapore Government, alongside significant retail participation from over 5 lakh small shareholders who collectively hold substantial stakes in the company.

Castrol India shares gained 1.81% to close at ₹189.30 following the launch of a mandatory open offer by Motion JVCo Limited, Stonepeak, and Canada Pension Plan Investment Board (CPPIB). The open offer comes after BP's announcement of selling a 65% shareholding in parent Castrol Limited to Stonepeak at an enterprise value of $10.10 billion.

Open Offer Launch and Terms

Motion JVCo Limited has officially launched an open offer to acquire up to 26% equity stake in Castrol India, according to a public announcement filed with stock exchanges. The offer complies with SEBI's takeover regulations following an indirect acquisition triggered by the global transaction.

BP's Strategic Divestment Details

The transaction generates approximately $6.00 billion in net proceeds for BP, including accelerated dividend payments, which will be used to reduce net debt towards its target range of $14-18 billion. BP's net debt stood at $26.10 billion at the end of the September quarter. The deal follows BP's strategic review of Castrol and is expected to complete by end of 2026, subject to regulatory approvals.

Current Shareholding Pattern

At the end of the September quarter, BP had already sold a 51% stake in Castrol India. The current shareholding structure shows diversified ownership with institutional and retail participation.

Market Performance and Outlook

Castrol India shares had earlier surged over 8% during the trading session after reports of BP's agreement to sell the majority stake. The company maintains its position in the chemicals sector with a mid-cap market capitalization of ₹18,966.40 crores. Upon completion, a new joint venture will be formed with 65% Stonepeak ownership and 35% BP retention, with BP maintaining a two-year lock-up period on its remaining stake.