Saudi Arabian Oil Company (Aramco) has agreed to acquire Valvoline’s lubricants unit, Valvoline Global Products (VGP), in a deal worth $2.65bn.

Valvoline Global Products is engaged in the production and distribution of automotive chemicals and automotive, commercial, and industrial lubricants.

The sale is part of Valvoline’s plan to focus on its Retail Services business.

Valvoline plans to use the cash proceeds to accelerate share repurchases, reduce debt, and invest in its Retail Services business.

Upon the completion of the transaction, Valvoline will own the Valvoline brand for all retail services purposes, excluding China and some countries in the Middle East and North Africa.

The Valvoline brand will be owned by Aramco for all product uses globally.

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In a press statement, Aramco said: “Aramco will benefit from VGP’s robust manufacturing and distribution network, significant R&D capabilities, strong partnerships with major OEMs, and a 150-year legacy of global brand recognition as it pursues opportunities to extend the brand globally.”

Aramco expects the strategic acquisition to optimise its global base oils production capabilities and expand research and development (R&D) activities while complementing Aramco’s premium branded lubricant products.

Aramco downstream senior vice-president Mohammed Al Qahtani said: “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.”

Subject to customary closing conditions and regulatory approvals, the transaction is scheduled to close in 2022 or early 2023.

Valvoline CEO Sam Mitchell said: “The sale of Global Products represents the successful outcome of our strategy to unlock the full, long-term value of our strong but differentiated Retail Services and Global Products businesses.”

Valvoline will also sign a long-term supply agreement with the Global Products business to purchase motor oil and related products.

Earlier this year, Aramco announced a net income of $39.5bn for the first quarter of 2022.