Ashland Global Holdings Inc. announced its wholly owned subsidiary, Ashland LLC, has signed a definitive agreement to sell its performance adhesives business to Arkema in an all-cash transaction valued at approximately $1.65 billion.
Arkema is a French chemical company. The Ashland unit has annual sales of more than $350 million.
The transaction is expected to close by the end of calendar year 2021, subject to receipt of regulatory approvals and satisfaction of other customary closing conditions.
“Performance Adhesives is a high-quality business with a strong and dedicated team that has demonstrated consistent and exceptional financial performance over the years,” said Guillermo Novo, CEO of Ashland. “I want to thank the leadership team and global employees for their dedication and commitment to Ashland and to our customers. I believe that Arkema will be a great owner of the business, creating value for customers and employees.”
Ashland expects net proceeds from the sale to total approximately $1.2 to $1.3 billion and the company will maintain strong capital allocation discipline using the proceeds to invest in the growth of core businesses as well as improve its balance sheet and reward shareholders, a release stated.
The transaction is part of Ashland’s strategy to focus its resources on expanding its additive and ingredients portfolio which will be strongly aligned with long term environment, social and governance (ESG) drivers and with resilient high-quality consumer markets that value innovation, according to the release.
Ashland has focused on the additive and ingredients business as it spun off its Valvoline oil business and the water and paper chemicals business.
The company also moved its headquarters from Kentucky to its research complex outside Wilmington. The Delaware operations were part of Hercules Incorporated, which was acquired by Ashland.
“As we look to the future, we are excited about the quality of our additive and ingredients portfolio and our leadership position in the core markets we serve,” said Novo. “Our experience and innovation capabilities, together with a more ESG-aligned portfolio will provide exciting opportunities to create value for all of our stakeholders, especially our customers, employees and shareholders. As we execute our strategy to expand Ashland’s additive and ingredients leadership position, we will maintain capital allocation discipline and focus on our goals of driving profitable growth, margin expansion and improved free cash flow conversion.”
