Ashland Inc. (ASH) has landed uncollared accelerated share repurchase (“ASR”) agreements with Deutsche Bank AG (DB) and JPMorgan Chase Bank, N.A. – a unit of JPMorgan Chase & Co. (JPM) – to buyback shares worth $750 million. These deals are part of the chemical maker’s earlier announced $1.35 billion share repurchase program.
Ashland expects an immediate delivery of roughly 5.9 million shares under these agreements. While the agreements extends through Jun 30, 2015, they may be closed earlier based on market conditions and other factors.
Ashland recently completed the sale of its Water Technologies unit to a fund managed by private investment firm Clayton, Dubilier & Rice for roughly $1.8 billion. The company received around $1.4 billion in net proceeds from the sale, which it will mainly use to return capital to shareholders through the $1.35 billion repurchase program.
Under the repurchase program, Ashland bought back over 760,000 shares for $80 million in third-quarter fiscal 2014 (ended Jun 30, 2014). In addition to the $750 million ASR program, the company also plans to introduce another program that will allow it to buyback additional shares worth $250 million.
Apart from share buybacks, Ashland will continue to evaluate other uses of its cash including potential investments in high-return capital projects, acquisitions and debt reductions.
Ashland’s ongoing restructuring initiatives coupled with its cost savings measures and continued actions to improve its core businesses will help it to achieve EBITDA margins that rank among the top 25% of its specialty chemicals peer group.
Ashland is a Zacks Rank #3 (Hold) stock.
LyondellBasell Industries NV (LYB), which also belongs to the chemical industry, is worth considering with a Zacks Rank #1 (Strong Buy).
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