Saudi Aramco buys Valvoline products arm for $2.65 billion

Saudi Aramco has agreed to buy the global products division of 150-year-old US motor oils and lubricants group Valvoline for $2.65 billion.

Kentucky-based Valvoline announced in October that it was dismantling two major business units by separating its global products division, which sells lubricants and engine maintenance products in 140 countries, and a retail service business that provides vehicle maintenance, mainly in the United States. we.*

Saudi Aramco, the world’s largest oil producer, said on Monday that the acquisition would help it expand its growing refining and petrochemical activities. “The global Valvoline products business is fully aligned with Aramco’s lubricant growth strategy,” said Mohammed Al-Qahtani, Senior Vice President of Refining, Processing and Marketing at Saudi Aramco.

After the sale, which is still subject to regulatory approval, Valvoline will focus on its retail service business, including expanding existing vehicle maintenance services to electric vehicle owners.

“Global product selling will be the successful outcome of our strategy to unlock the full, long-term value of our robust but differentiated retail services and global product business,” said Sam Mitchell, CEO of Valvoline.

The company said the $2.25 billion in net cash proceeds that Valvoline expects to receive from the sale will be used to increase returns for shareholders, reduce debt and invest in retail services.

Under the terms of the deal, Valvoline said, Saudi Aramco will own the Valvoline brand for all products globally, while the US group will own the global retail services brand, except for “China and certain countries in the Middle East and North Africa.”

Saudi Aramco is the world’s largest crude oil producer, currently pumping around 10.5 million barrels per day, equivalent to more than 10 percent of global supply. In May, it overtook Apple as the world’s most valuable company after rising stock prices driven by higher crude oil prices.

In recent years, Saudi Aramco, which listed a small slice of its shares on the Riyadh Stock Exchange in 2019, has increased its investments in refining, distribution and marketing.

In 2020, it spent $69 billion on a 70 percent stake in the petrochemical manufacturer, Saudi Basic Industries Corporation (SABIC). In January, it acquired a 30 per cent stake in a refinery in Poland along with a jet fuel marketing interest with BP.

In the United States, Saudi Aramco already has a 630,000-bpd oil refinery in Port Arthur, Texas, the largest in the country.

The company said the acquisition of Valvoline will complement its existing line of branded lubricants and enable it to expand product development activities and partnerships with equipment manufacturers.

*This story has been modified to reflect the date Valvoline announced its plan to separate its global product division

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