PARIS, France - Valvoline Inc. is selling its unit that makes lubricants , coolants and other automotive products to state - owned Saudi Aramco for $2.65 billion in cash to sharped focus on its retail services business.
The deal announced on Monday builds on the company's plan to separate the two units, with the sale proceeds set to fuel an expansion of the vehicles service center business Valvoline operate across the United States.
For Aramco, it deepens a bet on the long - term demand for petrochemical. The oil giant has been expanding its presence in the sector, known as downstream, and bought petrochemical maker Saudi Basic Industries Corp in 2020.
Valvoline shares rose nearly 4% in premarket trading, while Aramco was a tad higher.
'Valvoline's Global Products business fits perfectly with Aramco's growth strategy for lubricants as it will leverage out global base oils production, contribute to R&D capabilities and strengthen existing relationships with OEMs (original equipment markers)", said Mohammed Qahtani, senior executive at Aramco.
The business brought $1.76 billion in revenue last year, according for nearly 60% of Valvoline's sales, and is forecast to grow 24% in the third quarter.
Valvoline said it would also use the sale proceeds to accelerate share repurchases and reduce debt.
