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Ashland Rises After Jana Reveals 7.4% Stake and Talks

Ashland Inc., the biggest producer of specialty papermaking chemicals, jumped after activist investor Jana Partners LLC revealed it acquired a 7.4 percent stake in the company and has spoken to management.

Jana owned 5.81 million shares of the Covington, Kentucky-based chemical maker as of yesterday, the New York-based hedge fund said today in a regulatory filing. Jana has spoken with Ashland management about “the business, capitalization, corporate structure, operations, strategy and future plans,” according to the filing.

The statement was released after the close of regular trading in New York, where Ashland climbed 5.9 percent to $83.48 at 5:39 p.m.

Jana, co-founded by Barry Rosenstein in 2001, is an event-driven fund that invests in companies undergoing changes such as mergers, spinoffs and bankruptcies. Jana has been pushing for changes at Calgary-based fertilizer producer Agrium Inc. since May.

Ashland said last month that fiscal second-quarter profit will be lower than forecast because of weaker-than-expected demand in February. That followed first-quarter earnings that trailed analysts’ estimates because of lower sales volumes in the specialty-ingredients unit, which makes guar, a plant derivative used as a thickener in foods and in drilling fluids, and chemicals used to bind and coat pills.

Shares ‘Undervalued’

Jana bought the Ashland stake “because it believes the shares are undervalued and represent an attractive investment opportunity,” according to the filing. Jana said it expects to have more discussions with Ashland managers and possibly with Ashland directors, and it may take steps “to bring about changes to increase shareholder value.”

Gary L. Rhodes, an Ashland spokesman, declined to comment on Jana’s filing today. Charles Penner, a spokesman for Jana, declined to comment beyond the filing.

Ashland in November forecast adjusted earnings will rise to $9.50 to $10.50 a share by 2014, from $3.90 in the fiscal year ended Sept. 30. Chief Executive Officer James O’Brien said at the time that profit margins widened after the sale of units such as road paving and chemical distribution, and acquisitions of businesses that service paper, personal-care and pharmaceutical markets.

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