(Reuters) – Saudi Aramco is within the early phases of contemplating a possible bid for BP’s lubricant enterprise Castrol, in line with an individual with information of the matter.
BP has been exploring all choices round its Castrol enterprise, together with a attainable sale, as a part of a strategic assessment.
The enterprise could be anticipated to be price round $6 billion to $8 billion, Ashley Kelty, an analyst at Panmure Liberum, mentioned in a word final week.
A BP spokesperson declined to remark. Aramco didn’t instantly reply to a Reuters request for remark.
BP shares had been up 1% at 412.15p at 1332 GMT.
Bloomberg Information was first to report about Aramco’s curiosity in Castrol on Wednesday, which comes a day after the Saudi oil large reported a drop in its annual revenue and signalled it’ll slash its dividend payouts by almost a 3rd this yr.
BP mentioned final week it was reviewing its lubricants enterprise, Castrol, and focusing on $20 billion in divestments by 2027.
The divestment program is a key a part of CEO Murray Auchincloss’ technique to scale back capital expenditures, lower prices, divest property, and drive larger money circulate and returns, in the end aiming to revive investor confidence and improve earnings.
BP, which has underperformed friends like Shell and Exxon, has come underneath growing stress to alter technique after information that U.S. activist investor Elliott Funding Administration has constructed a 5% stake within the firm.
In keeping with Elliott, BP would profit from promoting its Castrol lubricants and its community of service stations to unlock worth and enhance share buybacks, a supply instructed Reuters final week.
Bloomberg’s report mentioned Aramco hasn’t made a remaining choice on the construction of a possible bid for Castrol or whether or not it’ll proceed as deliberations are nonetheless within the early stage.
(Reporting by Pushkala Aripaka, Prerna Bedi Shanima A in Bengaluru and Arunima Kumar in Mumbai; Modifying by Sherry Jacob-Phillips, Leroy Leo and Frances Kerry)