Valvoline to sell their entire lubricant business to Saudi Aramco for a whopping $2.65 billion

Today the petroleum giant Valvoline Inc. (NYSE: VVV) announced that they have signed an agreement with the Saudi Aramco for selling Valvoline’s Global Products business for $2.65 billion in cash.

“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,” said Sam Mitchell, Valvoline CEO. “We have built two leading businesses that are well-positioned for continued success as they pursue their individual strategic priorities.”

A Statement from Valvoline said, “We are pleased that our Global Products team will have a strategic new home with Aramco to further invest and grow the business while developing the brand into a global lubricants leader. The partnership between the world’s leading energy producer and one of the world’s most trusted global lubricant brands creates a powerful combination that delivers meaningful benefits to employees, customers — including the Retail Services business — suppliers and investors.”

As per the statement by Mohammed Y. Qahtani, Senior Vice President of Downstream at Aramco “Valvoline’s Global Products business fits perfectly with Aramco’s growth strategy for lubricants as it will leverage our global base oils production, contribute to our R&D capabilities and strengthen our existing relationships with OEMs. Valvoline’s brand strength and global recognition will continue to be developed and extended under Aramco’s stewardship. We are also very excited to have the outstanding people of Valvoline’s Global Products join the Aramco family as we continue to execute on our ambitious strategy,”.

Valvoline to sell their entire lubricant business to Saudi Aramco

As per the expectations of Valvoline they should be able to use the majority of the anticipated net after-tax cash proceeds of approximately $2.25 billion that is after the completion of the sale of this year to help them to fulfill the return of capital to shareholders through the share repurchases, with the rest of the part of the amount they will reduce their debt and to invest in attractive growth opportunities in the Retail Services business.

Completion of this agreement will be entirely a subject to customary closing conditions and regulatory approvals. The transaction is expected to be finalized in end of the calendar year 2022 or early 2023.

Preliminary Financial Results for Q3 2022

Valvoline shared their primary preliminary financial results for the fiscal third quarter which will be ending in June 30, 2022:

  • Preliminary reported net income of $99 million and diluted EPS of $0.55
  • Preliminary adjusted EPS of $0.58 and adjusted EBITDA of $180 million
  • Preliminary revenue of $957 million
  • Preliminary Retail Services sales growth of 16% and system-wide same store sales (SSS) growth of 9.9% and an ending net system-wide store count of 1,690
  • Preliminary Global Products sales growth of 24% and volume growth of 9%

The Company has given the date to give full financial report for the fiscal third quarter on August 3, 2022 and host an earnings conference call at 9 am ET on August 4, 2022.

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