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Ashland Agrees to Sell Distribution Unit to TPG for $930 Million

Ashland Inc., the maker of Valvoline motor oil, agreed to sell its distribution unit to TPG Capital for $930 million as it focuses on specialty chemicals. Ashland rose the month in five months in New York trading.

The transaction is scheduled to close before the end of March and is subject to regulatory approvals, Ashland said today in a statement.

“This divestiture reflects Ashland’s strategic direction, and completes a major step in our multiyear transformation into a high-performing specialty chemicals company,” Chief Executive Officer James O’Brien said in the statement. “Our overall goal remains to return maximum long-term value to our shareholders.”

O’Brien said last year he was negotiating to sell non- strategic assets, including the chemical-distribution unit, after acquiring specialty chemicals maker Hercules Inc. for $2.28 billion. The Ashland Distribution business has been a part of Ashland for more than 40 years and has sales of $3.4 billion, the Covington, Kentucky-based company said.

Ashland rose $3.67, or 7.2 percent, to $54.61 as of 9:52 a.m. in New York Stock Exchange composite trading. The shares earlier climbed 8.2 percent, the biggest intraday gain since Jan. 26. Ashland gained 29 percent this year before today.

The deal marks the third time in two months that TPG Capital, the private-equity firm run by David Bonderman, has purchased assets from a public company shedding units.

Previous Transactions

TPG last month said it would partner with Washington-based ACON Investments LLC to acquire most of Marathon Oil Corp.’s Minnesota refining holdings for about $900 million, the firm’s largest investment in fuel making and delivery.

Last week, MacDonald, Dettwiler & Associates Ltd., the maker of the robotic arm used on NASA space shuttles, agreed to sell its property-data unit to TPG Capital for about C$850 million ($846 million) after taxes.

“We are very excited to invest in Ashland Distribution, which Ashland has built into one of the leading global chemical distribution companies,” said TPG partner Michael MacDougall in the statement. “We look forward to partnering with management and the talented employees to continue the company’s growth.”

Bank of America Merrill Lynch advised Ashland on the transaction and Cravath, Swaine & Moore LLP acted as legal counsel. Citigroup Inc., Barclays Capital, and Morgan Stanley were the financial advisers to TPG Capital, and Vinson & Elkins LLP and Cleary, Gottlieb, Steen & Hamilton LLP acted as legal advisers.

To contact the reporter on this story: Cristina Alesci in New York at calesci2@bloomberg.net.

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net.

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