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An Aramco facility in Saudi Arabia. Valvoline expects to use the majority of cash from the deal to accelerate share repurchases and reduce debt. Image Credit: Reuters

Valvoline Inc said on Monday it would sell its global products business to oil giant Saudi Aramco for $2.65 billion in cash as the motor oil maker sharpens focus on its retail services unit.

Valvoline’s global products unit sells lubricants, coolants and other preventive maintenance products for light- and heavy-duty vehicles.

The company had last year decided to separate its retail services and global products divisions following a strategic review.

Valvoline said it expects to use the majority of cash from the deal to accelerate share repurchases, reduce debt and invest in its retail services business.

“The sale of Global Products will represent the successful outcome of our strategy to unlock the full, long-term value of our strong but differentiated Retail Services and Global Products businesses,” said Sam Mitchell, Valvoline CEO. “We have built two leading businesses that are well-positioned for continued success as they pursue their individual strategic priorities.”

Following the closing of the transaction, Valvoline will own the Valvoline brand for all retail services purposes globally, excluding China and certain countries in the Middle East and North Africa, while Aramco will own the Valvoline brand for all products uses globally.

In addition, Valvoline will procure motor oil and related products from the Global Products business through a long-term supply agreement. Completion of the transaction is subject to customary closing conditions and regulatory approvals. The transaction is targeted to close in late calendar year 2022 or early 2023.

“Valvoline’s Global Products business fits perfectly with Aramco’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. Valvoline’s brand strength and global recognition will continue to be developed and extended under Aramco’s stewardship. We are also very excited to have the outstanding people of Valvoline’s Global Products join the Aramco family as we continue to execute on our ambitious strategy,” said Mohammed Y. Qahtani, Senior Vice President of Downstream at Aramco.

Valvoline’s preliminary revenue for fiscal Q3 2022 stood at $957 million.