US chemicals and lubes producer to split brands in a new business strategy.
Ashland and its motor oil brand, Valvoline, are set to become two independent, separately traded companies in an announcement of a new business strategy.
According to its presentation to shareholders, Ashland sees greater value in spinning-off its lubes brand to allow the two companies to "focus on a distinct set of strategic objectives and go-to-market priorities".
The company highlighted four key areas as the rationale behind the move:
- Having different 'drivers' for creating business value
- Allowing more efficient allocation of capital across the businesses
- Enhancing strategic and management focus
- Offering distinct investment identities for shareholders
The new Ashland company will focus on its core business of speciality chemicals development and production, whilst Valvoline will continue to develop its expertise in motor lubes products and auto maintentance including the Instant Oil Change brand.
Ashland without its lubes division generated $3.6bn in the 12 months to July 2015, with Valvoline delivering $2bn of income over the same period. While Ashland's territory will focus predominantly on North America and Europe, Valvoline will have a more balanced mix between AsiaPac, Europe, Australia and Latin America.
Although Ashland is looking to push the separation through as quickly as possible, it is likely to take at least a year to complete.