Ashland Details Valvoline Spin-off Plans
US chemical producer Ashland has provided details of its plan to float up to 20% of the common stock in its engine lubricants subsidiary Valvoline as a first step in separating the business. The overall strategy for the tax-free spin-off to shareholders, announced in September 2015, is planned to be complete about six months after the initial public offering (ipo). Preparations for the separation, including a carve-out audit and creation of legal operating entities, remain on track, the company said.
A registration statement for the Valvoline flotation is to be filed with the US Securities and Exchange Commission (SEC) around the middle of calendar year 2016. The ipo, for which pricing has not been disclosed, is scheduled to take place in the fourth quarter.
Following the separation, Ashland will continue to be led by William Wulfsohn as CEO. Its main products will be composites and cellulosics, with construction and personal care the largest end-markets. Other markets include pharmaceuticals, food and beverage, architectural coatings, adhesives, automotive and energy.
With the flotation, Valvoline will have a “core shareholder base” and financial flexibility as it begins to operate as independently, the chemical producer said. Both companies will aim for “mid-to-high BB credit ratings after the separation.
Sam Mitchell, currently senior vice president and president of the Valvoline business within Ashland, will become CEO of the spun-off company. Wulfsohn will serve as its non-executive chairman.
According to Ashland, Valvoline is the number-two quick-lube chain and the number-three passenger-car motor oil brand in the US. The business reported annual sales of about $1.97 billion and operating profit of $359 million in fiscal 2015, which ended on 30 September.
Ashland’s remaining businesses generated about $3.42 billion in revenue and about $326 million in operating income in fiscal 2015