Ashland Inc. said it plans to float up to 20% of the common stock of Valvoline in an initial public offering (IPO) as part of its plan to separate Ashland into two independent, publicly traded companies: the new Ashland, composed of Ashland Specialty Ingredients and Ashland Performance Materials, and Valvoline, composed of Ashland’s Valvoline business segment.
The planned IPO is “subject to sufficiently attractive market conditions,” the company said in a statement.
The company expects to file a registration statement for the common stock of Valvoline with the U.S. Securities and Exchange Commission (SEC) in mid- 2016 and complete the IPO during the fourth quarter.
Ashland said it expects to distribute the remaining common stock of Valvoline to Ashland shareholders upon expiration of the IPO lock-up period, which is typically six months after completion of the IPO.
Ashland’s objective in pursuing an IPO of Valvoline as the first step in the planned separation is to create two strong independent companies, each with a targeted mid-to-high BB ratings profile, consistent with its earlier announcement made in September 2015.
The resultant capital structures for Valvoline and the new Ashland are expected to provide “an optimal level of financial flexibility for each company to pursue its long-term strategies,” the company said.
The planned IPO will allow Valvoline “to establish a core shareholder base in advance of the distribution of the remaining common stock, and facilitate industry-specific research coverage for Valvoline.”
Ashland Inc., based in Covington, Ky., U.S.A., is a global leader in providing specialty chemical solutions to customers in a wide range of consumer and industrial markets, including adhesives, architectural coatings, automotive, construction, energy, food and beverage, personal care and pharmaceutical.
Valvoline is the second largest quick-lube chain and the third largest passenger-car motor oil brand in the U.S.A. The business reported annual sales of about USD 1.97 billion and operating profit of USD 359 million in fiscal year 2015, which ended on September 30. Ashland’s remaining businesses generated about USD 3.42 billion in revenue and about USD 326 million in operating income in fiscal year 2015.