Ashland explores sale of performance adhesives unit
GREENVILLE – Ashland Global Holdings, a public specialty materials company headquartered off Hercules Road, announced recently that it is exploring the sale of its performance adhesives business unit in order to refocus its portfolio.
Ashland initiated a strategic review undertaken by Citi on May 25 to assess the potential sale, the first step for corporations looking to sell off parts of their portfolio. It anticipates completing the review by the end of 2021.
Company leaders began exploring the sale of the division in order to focus on growing Ashland’s integrated additive ingredients, particularly in pharmaceuticals, personal care and coatings.
“Ashland’s performance adhesives business unit has demonstrated exceptional financial performance with a strong and dedicated business team who excel at solutions in key niche markets,” Ashland Chairman and CEO Guillermo Novo said in a statement announcing the decision. “The business has valuable products with differentiating performance for customers across a variety of applications and markets. The team has recently introduced innovations which provide exciting growth potential for this unique business.”
The performance adhesives segment is largely based in the United States and is a much smaller book of business compared to specialty additives, producing $88 million in sales in the second quarter compared to the latter’s $158 million. Performance adhesives also continues to be impacted by raw-material cost escalation and constrained availability, according to recently updated investor guidance.
Novo said he expects the combination of strong financing availability, low interest rates and improving global macroeconomic conditions to create a supportive backdrop for a potential sale of the business unit.
The company plans to increase capital investment in its core additives portfolio of life sciences, personal care and household and specialty additives. Priority will be given to expand its high-value pharmaceuticals and personal care businesses, to enhance shareholder value through improved margins and focused growth capital deployment, including potential bolt-on acquisitions, officials said.
Ashland recently acquired the Schülke & Mayr personal care business which underscores the company’s strategy for growth in its core end-markets. That integration is proceeding as planned.
News of the performance adhesives unit sale exploration caused a 3% boost to Ashland’s share price, and it touched a 52-week high of $95.96 per share on June 1 before dipping again.