- Mergers & Acquisitions
Aramco completes acquisition of Valvoline Global Products
The Saudi Arabian Oil Company (Aramco) announced that it has completed its acquisition of the global products business of Valvoline Inc. for USD2.65 billion, through one of its wholly-owned subsidiaries.
With this acquisition, which follows the signing of an equity purchase agreement by the companies announced on August 1, 2022, Aramco accelerates its aim to become one of the world’s largest integrated branded lubricants players, with a huge base oil manufacturing footprint and a globally recognized lubricants brand.
Aramco will now own the Valvoline brand with respect to the products business. Valvoline Inc. will continue tol own the Valvoline brand with respect to its retail services or quick lubes business.
Aramco and Valvoline Inc. plan to work together to continue to grow the Valvoline brand equity globally, they said.
Valvoline Global Operations, which will continue to be headquartered in Lexington, Kentucky, U.S.A., is a worldwide leader in automotive and industrial solutions.
“This acquisition will advance our international lubricants growth strategy, and leverage our global base oil production and R&D capabilities. It also provides an exciting opportunity to strengthen our relationship with original equipment manufacturers worldwide by extending the reach of Valvoline Global Operations as a preeminent company among multinational lubricant brands, a position it has proudly held for over a century and a half,” said Mohammed Y. Al Qahtani, executive vice president of Downstream, Aramco.
Recently, Aramco, through its base oil unit, Saudi Aramco Base Oil Company – Luberef, announced the signing of an engineering, procurement, and construction (EPC) contract for the expansion of its Yanbu base oil refinery. The EPC contract with Petrojet, which is valued at SAR555 million (USD148.2 million), will expand existing units at the Yanbu facility to their maximum potential production capacity to 1.3 million metric tonnes per annum (MTPA) in 2025. Both Group II base oil capacity will be increased and Group III base oil capacity will be introduced in Yanbu, allowing flexibility for the production of additional Group II and Group III base oils based on market demand.
“It is a historic day for our 157-year-old brand. With the sale of the global products business to Aramco, each business can now better focus on future growth. Today, Valvoline Inc. becomes a pure-play, automotive services company with a right-sized capital structure and enhanced capital allocation,” said Sam Mitchell, Valvoline Inc. CEO.
Valvoline Inc. said it “expects to offer significant capital returns to our shareholders through equity buybacks over the next 18 months. All this combined allows us to focus our efforts on and further strengthen our brand as a premier auto after-market services provider.”
As previously announced, Valvoline Inc.’s board of directors approved a USD1.6 billion stock buyback, using the net proceeds from the sale. Valvoline Inc. expects to repurchase shares of its common stock up to the full amount of the authorization within 18 months, with the remaining net after-tax proceeds used for debt reduction and to invest in attractive growth opportunities.
Goldman Sachs & Co. LLC acted as financial advisor and Cravath, Swaine & Moore LLP acted as legal advisor to Valvoline in connection with the sale.