Ashland shareholders approve merger with Marathon Oil
LOUISVILLE, Ky. (AP) – Ashland Inc. shareholders voted Wednesday to approve the sale of the company’s minority stake in Marathon Ashland Petroleum LLC to partner Marathon Oil Corp., as the approximately $3.7 billion cash and stock transaction cleared its final hurdle. James J. O’Brien, Ashland’s top executive, called it a “momentous occasion” because the company is cutting its historic ties to gasoline refining and marketing. Ashland owns 38 percent of MAP, the nation’s fifth-largest gasoline refiner and marketer. Houston-based Marathon owns the rest. The transaction is expected to close Thursday. “After 82 years we have exited the petroleum refining and marketing business to focus on our core businesses in the chemical and transportation construction sectors,” said O’Brien, Ashland’s chairman and chief executive officer.
Ashland was founded as a small refinery in eastern Kentucky. In 1997, Ashland and Marathon Oil agreed to combine refining and marketing operations, and MAP began operation the next year. More recently, MAP revenue surged, producing operating income of $383 million for Ashland in the fiscal year ended Sept. 30, or more than half Ashland’s $662 million total.
Shareholders meeting at Ashland’s Covington headquarters in northern Kentucky voted overwhelmingly in support of the transaction, which had been slowed amid Ashland’s concerns that the deal would leave it with a giant tax bill.
Ashland and Marathon agreed to a formula in which each would share any tax load. Marathon would pay the first $200 million of tax obligation faced by Ashland. Ashland would pay the next $175 million of taxes due, and the two companies would share any remaining tax liability.
Ashland has said it does not anticipate having to pay taxes on the transaction unless its stock price exceeds $74.50 on the transaction’s closing date. In trading Monday afternoon, Ashland shares rose 82 cents, or 1.2 percent, to $71.31 on the New York Stock Exchange.
As part of the deal, Ashland shareholders would receive Marathon common stock totaling more than $900 million. Ashland would receive cash and other considerations totaling $2.8 billion.
Ashland plans to use part of its proceeds to retire debt.
Also as part of the deal, Marathon would acquire Ashland’s maleic anhydride business and 60 Valvoline Instant Oil Change centers in Michigan and northwest Ohio. Those businesses generated $8.2 million in operating income for Ashland in the last fiscal year.
Ashland’s transportation construction business is known as APAC. Its chemical sector includes Ashland Distribution, Ashland Specialty Chemical and Valvoline. In its most recent earnings report, Ashland reported 56 percent operating income growth in its chemical sector.
Ashland’s operations include road construction, specialty chemicals, lubricants, car-care products and chemical and plastics distribution. Brands include Valvoline motor oils, Eagle One appearance products, Zerex antifreeze and Pyroil performance products.
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On the Net:
http://www.ashland.com
AP-ES-06-29-05 1525EDT