Castrol India shares on March 6 recorded their biggest single-day rise in eight months amid talks of Saudi Aramco considering a possible offer for lubricants assets being sold by BP Plc.
The world’s largest energy company is studying whether to bid for part or all of the business that operates under the Castrol brand name, Bloomberg reported on March 5, citing sources.
Aramco may consider combining the Castrol assets with its Valvoline lubricants unit, which it bought in a $2.65 billion deal scheduled to be completed in 2023, the report said. Aramco is particularly interested in Castrol’s operations in fast-growing markets such as India, sources told Bloomberg.
At 12:40 pm on March 6, Castrol India shares were trading 11.5% higher at Rs 248 per share. It has a 52-week high of Rs 284 and a 52-week low of Rs 162.6. The stock has a market capitalisation of Rs 23,600 crore.
Last year, Aramco said it was looking for more refining and chemicals acquisitions in Asia and sees China, India and South-east Asia as its big growth markets. Owning businesses such as filling stations and lubricant makers gives oil producers greater influence across the energy value chain, while entrenching them deeper in the markets where they sell their crude.
Last month, oil major BP said it was considering a strategic review of its global lubricants business.
“BP is conducting a strategic review of its Castrol business with the intent to accelerate the next phase of Castrol’s value delivery,” the oil major said on February 26. “Castrol is a leading and trusted global lubricant 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,” BP said. BP said it may consider a sale of stake in Castrol to improve its balance sheet. “Castrol’s strategic review will consider all options with a focus on value creation.
Proceeds from any potential transactions arising as a result of the review will be allocated to strengthen BP’s balance sheet,” BP said. According to BP’s website, the Castrol brand serves customers in more than 150 countries in the automotive, marine, industrial, aerospace and energy generation sectors.
More recently, the brand has expanded into developing liquid cooling technology to combat the problem of overheating in data centers. Castrol is also a widely recognized brand in global sports through marketing partnerships with the NBA, WNBA and motorsports.
Elliott, who has built up a stake in BP worth about 3.7 billion pounds ($4.7 billion), is demanding that it make drastic cost cuts and divestments to strengthen its future as a standalone company.
Castrol India shares surge 12% amid talks of Saudi Aramco bidding for BP’s lubricants assets
