Saudi Arabian oil and gas giant Aramco said it has agreed to acquire the global products unit of Valvoline Inc for $2.65 billion.
The Nasdaq-listed Valvoline’s unit Valvoline Global Products sells lubricants, automotive chemicals like coolants as well as other preventive maintenance products for light and heavy vehicles.
Aramco said it will benefit from Valvoline Global Products’ manufacturing and distribution network, R&D capabilities, and partnerships with major original equipment manufacturers as it pursues opportunities to extend the brand globally.
The acquisition will complement Aramco’s line of premium branded lubricant products, optimize its global base oils production capabilities, and expand Aramco’s own R&D activities and partnerships with OEMs, the Saudi company said.
Mohammed Y. Al Qahtani, Aramco’s Senior Vice President of Downstream, said Valvoline’s global products business fits perfectly with the Saudi company’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”.
The deal is in line with Valvoline’s strategy to focus more sharply on its retail services unit, which had been separated from the global products unit last year, after the company went in for a strategic review.
Valvoline said it will use a bulk of the cash from the sale to go in for share buybacks, cut down its debt and invest in its retail services arm.
For Aramco, the all-cash deal is significant as it has been looking to get into this segment for a while now. This is a downstream sector for the oil and gas behemoth.
Two years ago, it had acquired the Saudi Basic Industries Corporation to strengthen its petrochemicals business.