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The New York Post reported Friday, that Ashland is
seeking bidders for its Valvoline division.
According to the NY Post story (see link below),
"the first round of bids came in within the past
several days and among those that have made it
through to the second round are Prestone and several
private-equity firms bidding individually."
This is big news for the lubricants business for a
number of reasons. The first of which is that
Valvoline is a major player in passenger car engine
oils (PCEO). According to Petroleum Trends Intl., a
leading market research and consulting firm in the
lubricants space, Valvoline's PCEO sales in the US
reached close to 80 million gallons in 2008. This
makes Valvoline one of the top four suppliers of
PCEO in the US market. So whomever acquires
Valvoline, they are acquiring a well recognized and
respected brand in the business.
But in addition to its volume and brand equity, the
sale of Valvoline has the potential to significantly
shake up the distribution channels. Depending on who
acquires Valvoline, some distributors and their
suppliers will likely find they are quickly dealing
with channel and brand conflicts they may have never
planned on when the year started.
And what if one of the Private Equity firms looking
at Valvoline is already connected with the
lubricants business and has an equity stake in a
large lubricant distributor? If they do, this could
be a game changer that brings us back to the old
days when a major brand is once again running trucks
and delivering lubricants. It could also be a game
changer because it gives a large distributor the
muscle of a powerful, nationally recognized brand.
Or what if Prestone (a unit of Honeywell Consumer
Products Group), the most widely recognized and
distributed brand of antifreeze in North America,
acquires Valvoline? Would this too be a game
changer?
Maybe so when one considers that the Honeywell
Consumer Products Group also manufacturers and
markets FRAM Oil, Air, Transmission and Fuel
Filters; Autolite Spark Plugs and Ignition Wire
Sets; and Holts Car care products. If this product
portfolio is combined with Valvoline's motor oil,
fuel and oil additives, Eagle One appearance
products, and Valvoline's other car care chemicals,
it quickly becomes a very powerful offering to both
the DIFM and DIY channels. An offering few others
can match.
But then again, now that Ashland is seeking bidders,
maybe someone new will enter the scene... Someone
from up North or from across the pond. Whatever the
case, however this plays out, you can be sure it
will shake up the market and make 2009 even more
exciting than it has been.
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