Mumbai: Castrol India shares rose 4.4 percent on the BSE, hitting an intra-day high of Rs 197.95, following the announcement of an open offer by Motion JVCo Limited along with Stonepeak and CPP Investment Board. At 9:45 AM, the stock was trading 3.24 percent higher at Rs 195.75, outperforming the BSE Sensex, which was up 0.24 percent at 85,206.57. The company’s market capitalisation stands at Rs 19,362 crore.
Details of the Open Offer
The open offer aims to acquire up to 26 percent of Castrol India’s equity from public shareholders, excluding the promoter group and certain specified parties. This could involve a payout of around Rs 4,990 crore based on the initial offer price of Rs 194.04 per share. The offer covers 25.71 crore fully paid-up equity shares of Rs 5 each. The filing specifies that the acquisition is being made by Motion JVCo and persons acting in concert, including Stonepeak and CPP Investment Board, for the purpose of the open offer.
Background of the Deal
This development follows British Petroleum’s agreement to sell a 65 percent stake in Castrol to Stonepeak for about USD 6 billion. BP will retain a 35 percent share in the new joint venture with Stonepeak, which it can sell after a two-year lock-in period. The transaction values Castrol at USD 10.1 billion and marks BP’s most ambitious asset sale to streamline operations and scale back renewable energy investments, after lagging behind competitors in share performance.
Financial Implications
The total net proceeds to BP from the deal are expected to be around USD 6 billion, which includes USD 0.8 billion for pre-payment of future dividend income on its retained stake and other adjustments. After deducting joint venture minority interests of USD 1.8 billion and debt-like obligations of USD 0.3 billion, the implied total equity value of Castrol stands at USD 8 billion. The new joint venture will comprise 65 percent ownership by Stonepeak and 35 percent by BP.
Disclaimer: This content is for informational purposes only and does not constitute financial advice. Investors should conduct their own research or consult a professional before making any investment or trading decisions.
