Ashland Inc. announced its plan to spin off its lubricants business, Valvoline, into a publicly traded company, as it sheds assets that are not part of its core specialty chemicals business. Ashland, which is based in Covington, Ky., U.S.A., has three business units — Ashland Specialty Ingredients, Ashland Performance Materials and Valvoline.
The spin-off would mark the final step in Ashland’s decade-long shift from an oil refiner to a specialty chemicals maker. The company’s last divestiture was more than a year ago when it sold its water technologies unit for about USD 1.8 billion.
Valvoline generated about USD 2 billion in sales in the year ended June 30, while the rest of Ashland’s businesses recorded sales of about USD 3.6 billion, the company said.
Following the separation of Valvoline from Ashland, Ashland shareholders will own shares of both the new Ashland and Valvoline.
Valvoline, which will celebrate its 150th anniversary soon, will focus on building the world’s leading engine and automotive maintenance business by providing hands-on expertise to customers in each of its primary market channels: Do-It-Yourself (DIY); Installers; Valvoline Instant Oil ChangeSM; and International.
Valvoline currently ranks second in the quick-lube chain market and third in the passenger car motor oil market in the United States. The brand operates and franchises approximately 940 Valvoline Instant Oil ChangeSM service centers in the United States.
As an independent publicly traded company, Valvoline will focus on growing its network of Valvoline Instant Oil ChangeSM stores, leveraging the Valvoline brand across multiple channels to capture new market share, and expanding its presence in Asia, Europe, Latin America and other international markets.
Wulfsohn will serve as non-executive chairman of Valvoline following the separation, and Sam Mitchell, currently senior vice president of Ashland and president of Valvoline, will serve as CEO.
The new Ashland
The new Ashland will be a global leader in providing specialty chemical solutions to customers in a wide range of consumer and industrial markets. These markets are currently served by Ashland’s Chemicals Group, comprised of Ashland Specialty Ingredients and Ashland Performance Materials. Key markets and applications include pharmaceutical, personal care, food and beverage, architectural coatings, adhesives, automotive, construction and energy.
The new Ashland will focus on: driving growth in higher-margin, highly differentiated core product lines where the company helps customers succeed; leveraging the innovation pipeline by driving new product introductions; optimizing the business and product portfolio; and taking a disciplined approach to capital investment.
Wulfsohn will serve as chairman and CEO of the new Ashland following the separation, while Luis Fernandez-Moreno, currently senior vice president of Ashland and president of Ashland’s Chemicals Group, will be chief operating officer of the new company. Kevin Willis, currently senior vice president and chief financial officer of Ashland, will serve in the same capacity in the new Ashland.
Bank of America Merrill Lynch is Ashland’s financial adviser and Cravath, Swaine & Moore LLP is the legal adviser. The transaction is subject to regulatory approvals and is expected to take one year to complete.