Saudi Aramco has completed its acquisition of US motor oil and lubricant maker Valvoline's global products business for $2.65 billion.
With the closing of the deal, which was first announced in August last year, Aramco will expand its presence in the premium branded lubricants market, the world’s largest crude producer said on Thursday.
“This acquisition will advance our international lubricants growth strategy, and leverage our global base oils production and R&D [research and development] capabilities,” said Mohammed Al Qahtani, Aramco's executive vice president of downstream operations.
“It also provides an exciting opportunity to strengthen our relationship with original equipment manufacturers worldwide by extending the reach of Valvoline Global Operations as a pre-eminent company among multinational lubricant brands.”
As part of the deal, Valvoline will own its brand name for all retail services globally while Aramco will own the Valvoline brand for all products used globally, the company said.
Valvoline Global Operations will continue to have its headquarters in Lexington, Kentucky.
“Valvoline Inc becomes a pure-play, automotive services company with a right-sized capital structure and enhanced capital allocation,” said its chief executive Sam Mitchell.
The company expects to offer “significant” capital returns to shareholders through share buy-backs over the next 18 months, Mr Mitchell said.
Saudi Aramco Base Oil Company, better known as Luberef, began trading on the Tadawul stock exchange in December after it raised $1.32 billion in an initial public offering.
Aramco’s refining unit sold more than 50 million shares, or about 29.7 per cent of the company's issued share capital, with the IPO drawing strong demand from investors in the kingdom and internationally.
Aramco reported a 39 per cent jump in its third-quarter profit as it benefitted from a surge in crude prices following Russia’s invasion of Ukraine in February last year.
Brent, the benchmark for two thirds of the world’s oil, soared to nearly $140 a barrel in March 2022 but has since given up most of its gains amid concerns about a global economic slowdown. It is currently trading at about $84 a barrel.