JANA Partners failed: Becoming your own activist

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A couple of years ago Jana Partners started pushing for a split up of the specialty chemicals company Ashland. The company, with underperforming chemical and adhesive businesses, was due for a change. Ashland is most famously known for its Valvoline motor oil.

Jana closed out its activist position in May, ending a two-year holding period that to a 58.6% return from the day it was announced via a 13D to the day he closed it via a 13D/A filing - locking in a 25% annualized return. But, now that Jana is gone, Ashland could be its own activist.

The key driver? A sale of its prized business, Valvoline. This business includes close to 1,000 oil change shops and makes up over a quarter of sales. This isn’t a fit for a chemicals company, but still a very profitable business. Buyers could include oil producers that want to better compete on the lubricant front - note that some of the big players have a presence in this space - including Exxon Mobil with Mobil engine oil and BP with Castrol.

It could also spin the Valvoline business off. Management knows this asset is not a core part of the Ashland business and has said such. It’s just a matter of time at this point.

Older $ASH coverage - our 2013 piece entitled Jana Partners strikes again