Ashland Inc. has announced that its board of directors has approved proceeding with a plan to separate Ashland into two independent, publicly traded companies. The announcement follows a comprehensive strategic planning review by the company’s global leadership team to better understand Ashland’s markets, customers and the opportunities for each business to create the most value for shareholders, customers and employees. It also represents the final step in Ashland’s more than decade-long transformation from an oil refiner and marketer to a specialty chemicals company, during which the company completed dozens of acquisitions and divestitures.

“Ashland is fortunate to have two strong, but distinctly different, business platforms with attractive growth opportunities and experienced leadership teams,” says William Wulfsohn, Ashland chairman and chief executive officer. “We believe that separating into two industry-leading public companies – one focused on specialty chemicals and the other focused on high-performance lubricants – will generate significant value for shareholders by enabling each company to focus on its specific business and strategic priorities. For the new Ashland, that means becoming a ‘solutions destination’ for a wide range of consumer and industrial customers through the delivery of value-added technology and world-class operations. For Valvoline, it means building the world’s leading engine and automotive maintenance business by providing hands-on expertise to customers around the world. Each company will be a leader in its respective industry, with the capital structure, financial resources and capital allocation strategies to drive greater revenue and earnings growth.”

The New Ashland
The new Ashland will focus on 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, comprising 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. Together these businesses generated approximately $3.6 billion in sales for the 12 months ended June 30, 2015.

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.   

Valvoline
Valvoline will focus on building the 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. The globally recognized brand, which soon will celebrate its 150th anniversary, generated sales of $2 billion for Ashland in the 12-month period ended June 30, 2015. Valvoline currently ranks as the #2 quick-lube chain and #3 passenger car motor oil brand 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 Change 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. 

Ashland will begin the process to separate its specialty chemicals and Valvoline businesses while it finalizes the transaction structure and obtains customary regulatory and other approvals. The company intends for the separation, which is subject to final board approval prior to completion, to be tax free for Ashland shareholders. Immediately following the separation, Ashland shareholders will own shares of both the new Ashland and Valvoline.