Saying of Tuesday’s announced separation of the company into two businesses, Ashland Inc. (NYSE: ASH) noted that this represents the final step in a transition that began more than a decade ago when Ashland began a transformation from an oil refiner and marketer to a specialty chemicals company. The company plans to separate its specialty chemicals business into a new company still called Ashland and a new lubricant company named after Ashland’s top brand, Valvoline.

The transaction is intended to be a tax-free separation for current shareholders of Ashland stock, who will own shares of both new companies immediately after the transaction. Both new companies expect to target mid- to high-BB credit ratings and intend to pay regular dividends consistent with providing attractive total returns to shareholders. Ashland currently pays an annual dividend of $1.56 per share, for a yield of 1.48%.

Ashland’s specialty chemicals business generated approximately $3.6 billion in sales in the 12 months to June 30, 2015, and the lubricant business generated about $2 billion in the same period.

Valvoline, currently the second-ranked quick-lube chain and third-ranked passenger car motor oil brand in the United States, operates and franchises approximately 940 Valvoline Instant Oil Change service centers in the United States. According to Tuesday’s announcement, Valvoline will focus on growing its network of Valvoline Instant Oil Change stores, leveraging the Valvoline brand across multiple channels to capture new market share and expanding its presence in Asia, Europe, Latin America and other international markets.

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Chairman and CEO William A. Wulfsohn said:

We believe that separating into two industry-leading public companies — one focused on specialty chemicals and the other focused on high-performance lubricants — will generate significant value for shareholders by enabling each company to focus on its specific business and strategic priorities. … Each company will be a leader in its respective industry, with the capital structure, financial resources and capital allocation strategies to drive greater revenue and earnings growth.

Following the separation, Wulfsohn will remain as chairman and CEO of the new Ashland and non-executive chairman of Valvoline. Luis Fernandez-Moreno will be the COO and Kevin Willis will be the CFO of the new Ashland. Sam Mitchell will serve as CEO of Valvoline.

Ashland stock traded up about 4% in Tuesday’s premarket session to $110.00, after closing at $105.72 on Monday. The stock’s 52-week range is $95.21 to $132.38.

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