Transaction broadens Aramco's global lubricants operations
Possibility of Valvoline Global Operations expanding into new industries and markets
Through one of its wholly-owned subsidiaries, the Saudi Arabian Oil Company ('Aramco') has finalized the acquisition of the Valvoline Inc. (NYSE: VVV) global products business ('Valvoline Global Operations') for $2.65 billion.
With this transaction, which comes after the businesses signed an equity purchase agreement on August 1, 2022, Aramco moves closer to realizing its vision of becoming one of the world's leading integrated, branded lubricant players.
As of right now, Valvoline Inc. will control the Valvoline name with regard to its retail services business, while Aramco will own the Valvoline brand with regard to the products company. In order to maintain the global growth of the Valvoline brand equity, Aramco and Valvoline Inc. intend to collaborate.
A leader in automotive and industrial solutions, Valvoline Global Operations, which will keep its headquarters in Lexington, Kentucky, develops cutting-edge products and world-class services for partners all over the world.
"This acquisition will advance our international lubricants growth strategy and leverage our global base oil production and R&D capabilities," said Mohammed Y. Al Qahtani, executive vice president of downstream at Aramco. By expanding the reach of Valvoline Global Operations as the leading organization among international lubricant companies, a position it has proudly held for more than a century and a half, it also offers an exciting chance to improve our relationship with original equipment manufacturers globally. We are excited to welcome the team at Valvoline Global Operations, one of the most recognizable brands in the business, and the Valvoline brand to the Aramco family. At the same time, we anticipate that Aramco's extensive global network will offer a superior framework for the future growth of this legendary brand.
CEO of Valvoline Inc., Sam Mitchell, stated: "This day is monumental for our 157-year-old brand. The sale of the global goods division to Aramco has allowed each company to better concentrate on its future expansion. Today, Valvoline Inc. transforms into a pure-play automotive services business with better capital allocation and a capital structure that is more appropriately sized. In addition, Valvoline Inc. anticipates that over the following 18 months, equity buybacks will provide our shareholders with sizeable capital returns. All of this put together enables us to concentrate on and further solidify our reputation as a leading provider of auto aftermarket services.
The acquisition strengthens Aramco's expanding position in the market for premium-branded lubricants and creates chances to strengthen the 150+ year-old brand's worldwide position, laying the groundwork for future expansion and downstream portfolio integration.
