Castrol India’s stock climbed almost 5% on Friday, reaching Rs 198 per share after a new open offer was announced to buy a 26% stake in the company.
Why the stock moved
The jump came after Motion JVCo, together with Stonepeak and the CPP Investment Board, filed an open offer to purchase up to 25.72 crore shares at Rs 194.04 each. That price is about 2.5% higher than the previous closing price.
Who is buying and what the offer means
- Buyers: Motion JVCo, Stonepeak Motion Holdco, Stonepeak Infrastructure Fund V (Cayman and Luxembourg), and CPP Investment Board Private Holding.
- Offer size: Up to 25.72 crore shares, representing roughly 26% of Castrol India.
- Price: Rs 194.04 per share, a small premium to the market price.
Background: BP’s global Castrol deal
Earlier this week, BP announced it will sell a 65% stake in its global Castrol business to US investment firm Stonepeak for about $6 billion. The whole transaction values Castrol at roughly $10.1 billion, including debt. BP will keep a minority interest through a joint venture.
The deal also involves minority stakes in Castrol’s operations in India (49%), Vietnam (35%), Saudi Arabia (50%), Thailand (40%) and other regions.
Recent share performance
- Shares have risen about 7% over the past five trading days.
- They fell more than 9% over the last six months.
- The stock is down a little over 4% in the current year.
- Current P/E ratio is above 19.
What investors should consider
- The modest premium suggests the offer is priced fairly.
- Strong backing from global investors could bring more stability to Castrol India.
- Watch for any further announcements from BP or the consortium that might affect share price.
Remember, this is just a perspective, not a prediction. Do your own research and consider your risk tolerance before making any investment decisions.