BP plc agreed Monday to sell its Carson, Calif., refinery and a related retail business to Tesoro Corp. for $2.5 billion in cash, part of a wider BP plan to exit all of its southern U.S. refining operations.

San Antonio-based Tesoro agreed to pay $1.18 billion for the refinery and 800 Arco-branded gas stations and a further $1.3 billion for the refinery's inventory. It will sell the logistics operation on to its sister company Tesoro Logistics LP for $1 billion.

BP appears to be willing to take a hit on the sale price in order to extract a quick, clean exit from the business. Tesoro described the deal, which values the refinery at $14 per complexity barrel, as "an historic low transaction multiple." The complexity rating measures a refinery's efficiency in converting crude fuel into gasoline.

Private equity firms including Apollo Global Management LLC were interested in buying the BP refinery, said a private equity executive who described the sale price as "well more" than what a private equity firm would pay. Chinese and Brazilian companies expressed interest as well.

On a conference call, Tesoro president and CEO Greg Goff said the purchase price was "attractive" at $14 per complexity barrel. In a PowerPoint presentation the company cited Valero Energy Corp.'s Mereux refinery purchase for $171 per complexity barrel and CVR Energy Inc.'s Wynnewood refinery purchase for $882 per complexity barrel, both in September 2011.

The bidding process was "convoluted," the PE source said, in part because BP didn't use any outside financial advisers.

The deal is BP's second stateside disposal in quick succession following a Friday announcement that it had offloaded its Sunray and Hemphill gas processing plants in Texas to Eagle Rock Energy Partners LP for $227.5 million.

London-based BP is also in talks with potential buyers for its remaining southern U.S. refining asset, the Texas City refinery. CEO Bob Dudley said at the end of July that he expected to complete a deal before the end of the year.

"Together with the intended sale of Texas City, this will allow us to focus BP's operations and investments exclusively on our three northern U.S. refineries, which are crude feedstock advantaged," BP chief executive of global refining and marketing business Iain Conn said in a statement.

The Carson refinery has a throughput capacity of 266,000 barrels per day and a Nelson complexity of 13.3. In addition to the refinery operation, Tesoro will also take control of a network of pipelines and storage terminals, and about 800 Arco-branded, dealer-operated filling stations in Southern California, Arizona and Nevada, as well as some other assets.

BP has now sold or agreed to sell about $26.5 billion of assets since 2010 as part of a wider plan to raise $38 billion by the end of 2013. Much of that cash has been paid into a fund to meet legal, cleanup and compensation costs associated with the disastrous Gulf of Mexico oil spill. But the sales are also part of a plan instigated by Dudley to reduce BP's footprint and focus on faster-growing operations, a strategy dubbed "shrink to grow."

BP acquired the Carson refinery in 2000, when it paid $29 billion for the operation's parent company, Atlantic Richfield Co., or Arco.

The refinery is located close to Tesoro's 97,000 barrel per day Wilmington refinery. The combination of the Carson refinery with Tesoro's existing West Coast operations should deliver about $250 million in annual synergies, though it will also demand a further $225 million of capital expenditure, according to the buyer.

"Given Tesoro's existing operations on the West Coast ... we are well positioned to generate significant operational efficiencies," Goff said in a statement. "Excluding the value of inventory and after the sale of the logistics assets to TLLP, the company will have paid about $175 million to purchase a 266 [million barrels per day] high complexity refinery in Southern California, a fully integrated retail marketing network, including the Arco brand, and a pair of high-value complementary integrated assets."

Tesoro expects the deal to add about 24% to its earnings per share in each of the first and second years following the deal. The transaction is expected to close before mid-2013.

Tesoro will fund the deal with about $500 million to $750 million of cash, the same amount of debt drawn against the acquired inventory and interim financing of $1 billion to $1.5 billion. The interim debt will be cleared by the sale of the logistics operation to Tesoro Logistics and the sale of excess inventory and real estate, for as much as $300 million.

Tesoro's shares traded Monday morning at $37.65, up $2.15, or 6%. Tesoro Logistics shares were also up, at $41.36, a climb of $1.86, or just under 5%. BP shares were marginally lower at 447.95 pence ($7.03).

Tesoro received legal counsel from a Pillsbury Winthrop Shaw Pittman LLP team led by Bruce McDiarmid and including Robert A. James, Michael Murphy, Christine L. Richardson, Paula M. Weber. and Patrick J Devine. Carlos Sole at DLA Piper LLP served as counsel to BP.