Saudi Aramco has agreed to buy the worldwide products division of the 150-year-old US motor oil and lubricants group Valvoline for $2.65bn.
Kentucky-based Valvoline introduced in October it was breaking apart its two principal enterprise items via a separation of its world products division, which sells lubricants and engine upkeep products in 140 international locations, and its retail service enterprise, which presents automobile upkeep, primarily within the US.*
Saudi Aramco, the world’s greatest oil producer, mentioned on Monday the acquisition would assist it to broaden its rising downstream actions. “Valvoline’s global products business fits perfectly with Aramco’s growth strategy for lubricants,” mentioned Mohammed Al Qahtani, Saudi Aramco’s senior vice-president of Downstream.
Following the sale, which continues to be topic to regulatory approval, Valvoline will give attention to its retail service enterprise, together with the growth of its current automobile upkeep companies to electrical automobile homeowners.
“The sale of Global Products will represent the successful outcome of our strategy to unlock the full, long-term value of our strong but differentiated retail services and global products businesses,” mentioned Valvoline’s chief government Sam Mitchell.
The $2.25bn in web money proceeds Valvoline expects to obtain from the sale can be used to improve returns to shareholders, cut back debt and spend money on retail companies, it mentioned.
Under the phrases of the deal, Saudi Aramco will personal the Valvoline model for all products globally, whereas the US group will personal the model for retail companies globally, excluding “China and certain countries in the Middle East and north Africa”, Valvoline mentioned.
Saudi Aramco is the world’s greatest producer of crude oil, at the moment pumping about 10.5mn barrels a day, equal to greater than 10 per cent of worldwide provide. In May it overtook Apple because the world’s most useful firm after a share worth rally pushed by hovering crude costs.
In latest years Saudi Aramco, which listed a sliver of its shares on the Riyadh stock trade in 2019, has elevated its downstream investments in refining, distribution and advertising.
In 2020 it spent $69bn on a 70 per cent stake within the petrochemicals producer Saudi Basic Industries. In January, it acquired a 30 per cent in a refinery in Poland together with an curiosity in a jet gasoline advertising enterprise with BP.
In the US, Saudi Aramco already owns a 630,000 b/d oil refinery in Port Arthur, Texas, which is the most important refinery within the nation.
The firm mentioned the Valvoline acquisition would complement its current line of branded lubricants and allow it to broaden its product growth actions and partnerships with gear producers.
*This story has been amended to replicate the date Valvoline introduced its plan to separate its world products division