Valvoline Inc. has reached a definitive agreement to sell its global products business to Aramco for $2.65 billion in cash. Valvoline expects to use the majority of the anticipated net after-tax cash proceeds, valued at approximately $2.25 billion, for share repurchases, debt reduction and investing in “attractive growth opportunities” in its retail services (quick lubes) business.
The sale of its global products businesses allows Valvoline to focus on expanding its retail footprint, with an increased emphasis on franchisee growth, according to management. Valvoline, operating solely as a retail services business, will be led by Sam Mitchell as CEO and Lori Flees as president.
Valvoline will procure motor oil and related products from the global products business via a long-term supply agreement.
“After closing, we will focus on our market-leading retail services business, including further enhancing our growth trajectory and world-class service model,” Valvoline CEO Sam Mitchell said. “Retail services will benefit from a strong balance sheet and a clear strategy for value creation, including extending our world-class preventive auto maintenance service model to EV owners, OEMs and fleets as the car parc evolves.”
Completion of the transaction is subject to customary closing conditions and regulatory approvals. The deal is expected to close in late 2022 or early 2023.
Based on currently available information, management expects Valvoline to generate roughly $1.50 billion in retail services sales in fiscal 2022 — an increase of more than 20% compared to fiscal 2021.