Saudi Aramco to buy Valvoline’s product arm for $2.65 billion

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

Kentucky-based Valvoline announced in October that it was spinning off its two main business units by separating its global product division, which sells lubricants and engine care products in 140 countries, and its retail services business, which offers vehicle maintenance, primarily in the US.*

Saudi Aramco, the world’s largest oil producer, said on Monday the acquisition would help it expand its growing downstream business. “Valvoline’s global product business fits perfectly with Aramco’s growth strategy for lubricants,” said Mohammed Al Qahtani, Saudi Aramco’s senior vice president, Downstream.

Following the sale, which is still subject to regulatory approval, Valvoline will focus on its retail services business, including extending its existing automotive maintenance services to owners of electric vehicles.

“The sale of Global Products will represent the culmination of our strategy to unlock the full long-term value of our strong but differentiated global retail and product services businesses,” said Valvoline Chief Executive Officer Sam Mitchell. .

The $2.25 billion net cash proceeds Valvoline expects to receive from the sale would be used to increase shareholder returns, reduce debt and invest in retail services, he said. declared.

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

Saudi Aramco is the world’s largest producer of crude oil, currently pumping around 10.5 million barrels a day, equivalent to more than 10% of the world’s supply. In May, it overtook Apple as the world’s most valuable company after a rise in the share price led by soaring crude prices.

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

In 2020, he spent $69 billion for a 70% stake in petrochemicals maker Saudi Basic Industries. In January, it acquired a 30% stake in a refinery in Poland as well as a stake in a jet fuel marketing business with BP.

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

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

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