Ashland’s $1 Billion Share Repurchase Plan – Buyback Wednesdays

Key Insights:

• Ashland Inc. (ASH) is a chemical company with a market cap of $4.57 billion that serves customers in more than 100 countries.
• The company has been going through a restructuring process by spinning off and selling divisions to become a simpler and higher-margin specialty business.
• Profit margins have increased in recent years because of the divestment of less profitable businesses and a reduction in net debt.

Companies in their growth phase often go on a buying spree. Years later, when growth moderates and they are suffering under a combination of heavy debt burdens and low profitability, they start divesting assets. Ashland falls in the latter category and in recent years the company has undergone a significant transformation, streamlining its operations to focus on higher-margin specialty business. This strategic shift has resulted in notable increases in margins and reduction in net debt.

Divestitures:

To streamline its operations and focus on core activities, Ashland divested non-core businesses, utilizing some of the proceeds for smaller bolt-on acquisitions. These strategic actions resulted in improved profit margins, reduced long-term debt, and an aggressive share buyback program.

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