Upon completion of the sale, Ashland will be a focused additive and ingredients company with leadership positions in life sciences, personal care and coatings
Ashland Global Holdings Inc. (NYSE: ASH) announced today that 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 or 20 times LTM EBITDA1. 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.
Ashland's performance adhesives business has a portfolio of products that are well positioned in the market and valuable technologies with differentiating performance for customers across a variety of applications and markets.
“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, chairman and chief executive officer, 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 optimize its balance sheet and reward shareholders.
The company plans to hold an Investor Day later this year in which Novo and members of the executive team will present key business strategies and growth initiatives and outline expectations for Ashland's longer-term performance.
The transaction is driven by 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.
“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."
Citi is acting as financial advisor to Ashland. Cravath, Swaine & Moore LLP and Squire Patton Boggs LLP are acting as legal advisors to Ashland.
Ashland Global Holdings Inc. (NYSE: ASH) is a premier specialty materials company with a conscious and proactive mindset for sustainability. The company serves customers in a wide range of consumer and industrial markets, including adhesives, architectural coatings, automotive, construction, energy, food and beverage, nutraceuticals, personal care and pharmaceutical. Approximately 4,200 passionate, tenacious solvers – from renowned scientists and research chemists to talented engineers and plant operators – thrive on developing practical, innovative and elegant solutions to complex problems for customers in more than 100 countries. Visit www.ashland.com and www.ashland.com/sustainability to learn more.
1 Based on EBITDA of $82 million for the performance adhesives business for the 12 months ended June 30, 2021. EBITDA represents operating income plus depreciation and amortization. EBITDA is a non-GAAP financial measure. See Ashland’s periodic reports on Form 10-K and 10-Q for reconciliations for the relevant periods.
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