Ashland is getting out of material and chemicals distribution, selling the business unit, which accounted for 37% of its 2010 sales, for $930 million to TPG Capital in an all-cash deal. The deal is expected to close in March and generate after-tax proceeds of approximately $825 million.
Part of Ashland for more than 40 years, the Ashland Distribution business had $3.4 billion in revenue in 2010, with approximately 2000 employees across North America and Europe, entering the Chinese market in 2009. For the fiscal year that ended on Sept. 30, 2010, distribution accounted for 37% of Ashland's sales, ahead of its Hercules Water Technologies (20%), Consumer Markets (19%), Performance Materials (14%), and Aqualon Functional Ingredients (10%) units. Overall, distribution generated sales of $3.4 billion and EBITDA (earnings before income taxes, depreciation, and amortization) of $89 million. Relative to its outsized stature within the company's sales, the business's lower margins meant that distribution did not contribute as much to earnings, accounting for only 10%....