Ashland Water Technologies makes specialty chemicals for markets including pulp and paper, power generation, mining, energy and food and beverage, generating about $1.7 billion in annual sales. The unit has 31 manufacturing facilities spread across 17 countries on five continents, with pulp and paper accounting for about 67% of 2013 sales.
Covington, Ky.-based Ashland put the water treatment unit on the block last July, following efforts to restructure the business and boost its performance. Ashland said it expects net proceeds of about $1.4 billion from the sale, with the company planning to use most of the funds to repurchase shares.
Ashland chairman and CEO James J. O'Brien in a statement said the water technologies business "has shown tremendous improvement" over the last year, saying "I believe it is well positioned to build on that momentum under Clayton, Dubilier & Rice ownership."
Post-deal Ashland will focus on its core specialty chemicals business. O'Brien said that the divestiture, coupled with the company's internal restructuring, "will help position Ashland for Ebitda margins that rank among the top 25 percent of specialty chemical companies."
CD&R reportedly beat out a joint bid from Blackstone Group LP and Danaher Corp. as well as a separate offer from Rhone Group LLC to win the unit. The firm said that post-deal it expects Ashland exec John Panichella to continue to lead the unit, with one-time NextEra Energy Inc. chairman and CEO Lewis Hay III chairing the independent company's board.