The New
York Post reported Friday, that Ashland is
seeking bidders for its Valvoline division.
According to the NY Post story (see link
below), "the first round of bids came in
within the past several days and among those
that have made it through to the second round
are Prestone and several private-equity firms
bidding individually."
This is big news for the lubricants business
for a number of reasons. The first of which
is that Valvoline is a major player in
passenger car engine oils (PCEO).
According to Petroleum Trends Intl., a
leading market research and consulting firm
in the
lubricants space, Valvoline's PCEO
sales in the US reached close to 80 million
gallons in 2008.
This makes Valvoline one of the top four
suppliers of PCEO in the US market. So
whomever acquires Valvoline, they are
acquiring a well recognized and
respected brand in the business.
But in addition to its volume and brand
equity, the sale of
Valvoline has the potential to significantly
shake up the
distribution channels. Depending on who
acquires Valvoline, some distributors and their
suppliers will likely find they are quickly
dealing with channel and brand conflicts they
may have never planned on when the year started.
And what if one of the Private Equity firms
looking at Valvoline is already connected
with the lubricants business and has an
equity stake in a large
lubricant distributor? If they do,
this could be a game changer that brings us
back to the old days when a major brand is
once again running trucks and delivering
lubricants. It could also be a game changer
because it gives a large distributor the
muscle of a powerful, nationally recognized
brand.
Or what if Prestone (a unit of Honeywell
Consumer Products Group), the most widely
recognized and distributed brand of
antifreeze in North America, acquires
Valvoline? Would this too be a game changer?
Maybe so when one considers that the Honeywell
Consumer Products Group also manufacturers
and markets FRAM Oil, Air, Transmission and
Fuel Filters; Autolite Spark Plugs and
Ignition Wire Sets; and Holts Car care
products. If this product portfolio is
combined with
Valvoline's motor oil, fuel and oil
additives, Eagle One appearance products, and
Valvoline's other car care chemicals, it
quickly becomes
a very powerful offering to both the
DIFM and
DIY channels. An offering few others can match.
But then again, now that Ashland is seeking
bidders, maybe someone new will enter the
scene... Someone from up North or from across
the pond.
Whatever the case, however this plays out,
you can be sure it will shake up the market
and make 2009 even more exciting than it has
been.