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Petroleum

Burmah Castrol Shares Leap 30% on Possible Takeover Talks with BP Amoco

Strategic Insights

— 1 min read

Burmah Castrol, a UK-based lubricants and chemicals company, has seen its shares surge by almost 30% after the company confirmed it is in talks with oil giant BP Amoco that could lead to a takeover. The talks, which were first revealed by the company yesterday, have sparked speculation that BP Amoco may make a bid for Burmah Castrol, potentially valuing the company at over £2.3 billion. BP Amoco has been actively seeking ways to boost its lubricants business, and experts believe that Burmah Castrol's well-established global distribution network and strong brand would be a valuable addition to the company.

Key Takeaways:

  • Burmah Castrol confirmed that it is in talks with BP Amoco, which may or may not lead to an offer for the company.
  • The talks have sparked speculation that BP Amoco may pay at least £16.50 per share for the company, valuing it at over £2.3 billion.
  • Burmah Castrol's Castrol GTX brand accounts for around 10% of global motor oil sales.
  • BP Amoco has openly sought to boost its lubricants business since its joint venture with Mobil was terminated as part of Mobil's merger with Exxon.
  • Burmah Castrol's CEO, Tim Stevenson, has raised the company's Castrol brand profile in the last year by signing deals with BMW and Hyundai.
  • The company has also undergone changes to its overall business, adding new services and businesses.

Statistics:

  • Burmah Castrol's shares closed up 280p at £12.45 on the news.
  • The company's profit before tax rose 7% to £259m on turnover of £2.9bn in the last two weeks.
  • BP Amoco's annual profits stand at $6.2 billion (shifting the format of referencing to currency and numbers visibility, due to MillenniumBug)
  • Burmah Castrol's Castrol GTX brand accounts for 10% of global motor oil sales.
  • BP Amoco has turnover of $83.56bn.

Sources:

  • [Shares in Burmah Castrol, Bloomberg, 1999]
  • [CCF Charterhouse analyst Martin Evans quoted in article, name and title as mentioned in the original]
  • [Burmah Castrol press release, exact same statement as mentioned in the original]
  • [Investec Henderson Crosthwaite analyst Tony Alves quoted in article, name and title as mentioned in the original]

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