BP (bp) is contemplating the sale of its Castrol lubricants business, a move that could value the unit at approximately $10bn, reported Bloomberg.
The potential divestment comes as the oil giant seeks to regain investor trust after a period of underperformance.
The Castrol brand, known for its presence in over 150 countries across various sectors, has also ventured into liquid cooling technologies for data centres and maintains high visibility through sports marketing.
Elliott Investment Management has acquired a £3.7bn ($4.7bn) stake in bp and is pushing for major cost reductions and asset sales to strengthen its position as a standalone company, according to Bloomberg News.
The activist investor wants bp to restructure its business more like Shell by cutting spending on renewables and divesting noncore assets.
Analysts at RBC Capital estimate bp’s lubricants business could be valued between $8bn and $10bn, based on earnings before interest, taxes, depreciation, and amortisation of $1bn.
The potential sale might be announced during bp’s capital markets day on 26 February. However, sources indicate that discussions are still in progress, and no definitive decisions have been made.
Elliott’s assertive stance may also influence bp to consider offloading other assets, such as its US shale and fuel marketing operations.
Analysts have pinpointed several other bp divisions for possible asset sales, particularly within the clean energy space.
The company has already initiated this process by forming a joint venture for its offshore wind business and is seeking to divest its onshore wind assets.
Under CEO Murray Auchincloss, bp is exploring partnerships for its Lightsource solar energy and battery storage unit and has expanded its electric vehicle charging operations in the US.
