September 22, 2015 / 3:01 PM / 3 years ago

UPDATE 1-Chemicals maker Ashland to spin off engine lubricants unit

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Sept 22 (Reuters) - Ashland Inc said it will spin off its engine lubricants unit into a publicly traded company, Valvoline, as it sheds assets that are not part of its core specialty chemicals business.

The spinoff would mark the final step in Ashland’s decade-long shift from an oil refiner to a specialty chemicals maker, the company said in a statement on Tuesday.

Ashland shares were up 1 percent at $106.97 in morning trading, while the broader market was down more than 1.5 percent.

The company’s last divestiture was more than a year ago when it sold its water technologies unit for about $1.8 billion, bowing to pressure from activist investor Jana Partners LLC. Jana exited its investment in Ashland in May.

Valvoline generated about $2 billion in sales in the year ended June 30, while the rest of Ashland’s businesses recorded sales of about $3.6 billion, the company said.

The separation will be tax free for its shareholders, and is expected to take at least a year to complete, Ashland said.

Bank of America Merrill Lynch is Ashland’s financial adviser and Cravath, Swaine & Moore LLP its legal adviser. (Reporting by Amrutha Gayathri in Bengaluru; Editing by Savio D’Souza)

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