Valvoline Inc. (Lexington, Ky.) has reached a definitive agreement with The Saudi Arabian Oil Company (Aramco; Dhahran) for the sale of Valvoline’s Global Products business for $2.65 billion in cash.
Valvoline Global Products is a leading worldwide independent producer and distributor of premium branded automotive, commercial and industrial lubricants, and automotive chemicals.
The transaction is subject to certain customary adjustments set forth in the equity purchase agreement.
“Valvoline’s Global Products business fits perfectly with Aramco’s growth strategy for lubricants as it will leverage our global base oils production, contribute to our R&D capabilities and strengthen our existing relationships with OEMs. Valvoline’s brand strength and global recognition will continue to be developed and extended under Aramco’s stewardship. We are also very excited to have the outstanding people of Valvoline’s Global Products join the Aramco family as we continue to execute on our ambitious strategy,” said Mohammed Y. Qahtani, Senior Vice President of Downstream at Aramco.
Upon completion of the sale, Valvoline expects to use the majority of the anticipated net after-tax cash proceeds of approximately $2.25 billion to accelerate the return of capital to shareholders through share repurchases, with the remaining portion used for debt reduction and to invest in attractive growth opportunities in the Retail Services business.
Following the closing of the transaction, Valvoline will own the Valvoline brand for all retail services purposes globally, excluding China and certain countries in the Middle East and North Africa, while Aramco will own the Valvoline brand for all products uses globally. Valvoline and Aramco will expand their existing partnership to ensure that Valvoline’s iconic brand is managed in a consistent and holistic manner. In addition, Valvoline will procure motor oil and related products from the Global Products business through a long-term supply agreement.
Completion of the transaction is subject to customary closing conditions and regulatory approvals. The transaction is targeted to close in late calendar year 2022 or early 2023.