Ashland explores sale as private equity giants circle

Specialty cosmetic ingredient manufacturer Ashland is exploring a possible sale as other beauty companies and private equity firms are prospecting its specialty cosmetic ingredients portfolio. Following the news, the company’s stock jumped 6%. 

The move comes after months of pressure from activist investors, who have been pushing the chemical maker to put itself up for sale.

Ashland is now reportedly collaborating with two major banks, Citigroup and Lazard, to help it manage the sales process, according to Bloomberg. The company is also currently in talks with both strategic buyers and financial investors, according to sources close to the matter. 

While discussions are ongoing, there is no guarantee that a deal will go through. Ashland has a current market value of approximately US$3.5 billion.

Several large private equity groups have reportedly made contact with the company, including Apollo Global Management, Carlyle Group, and Advent International — the powerhouse behind Olaplex, Laura Mercier, and most recently, Salt & Stone.

Moreover, Standard Industries, which is already one of Ashland’s biggest shareholders, has also expressed interest in a potential deal.

Boiling bids

News of the potential sale follows prolonged pressure from activist investor groups. At the beginning of June, Ancora Holdings publicly announced that it had a significant stake in Ashland and was pushing for a sale. At the time, the firm estimated a sale could boost the share price by 30%, believing the company’s value strategy wasn’t aggressive enough.

By late June, a second activist firm, Cruiser Capital Advisors, also began pushing Ashland’s board to pursue a sale. Both investors reportedly threatened proxy fights if the company did not make tangible progress toward a sale by September, when the company holds its director nominations.

Ashland supplies specialty ingredients for personal care and other consumer markets.At the end of July, Ashland announced it reached a “cooperation agreement” with Ancora Holdings. As part of the agreement, Ashland expanded its board by appointing two new directors effective immediately and created a capital allocation committee.

“The newly formed capital allocation advisory committee will support and make recommendations to the board regarding the company’s capital allocation approach and strategic planning,” Ashland’s notice reads.

Financial lead-up

In Q3, Ashland’s sales rose 7% year-over-year to US$497 million. The company said it achieved volume gains across all four business units, with the Personal Care segment a standout performer. The segment delivered US$155 million in sales, marking a 5% increase, driven by growth in skin care, biofunctional actives, and microbial protection.

The company’s adjusted EBITDA slipped 4% to US$109 million. The figure was weighed down by lingering operational challenges, inflation-related cost pressures, and higher incentive compensation costs. Earlier this year, Ashland also announced that it was adjusting its pricing strategies amid the Iran War.

Despite citing some operational hurdles, the company’s cash generation remained relatively healthy in Q3 with US$103 million in ongoing free cash flow and net leverage sitting at 2.4 times, in line with its long-term target.

Days after the results were posted, Ashland’s board declared a quarterly cash dividend. The move comes on the heels of the capital allocation advisory committee’s formation, indicating that it is already donning responsibilities, including overseeing cash returns to shareholders.