Calumet Announces Strategic Asset Sale of Royal Purple® Industrial Business Division
Calumet, Inc. (NASDAQ: CLMT), headquartered in Indianapolis, has made waves in the business world by announcing the sale of its industrial assets related to the Royal Purple brand. In a development that could reshape its financial strategy, Calumet has entered into a definitive agreement to sell these assets to a wholly-owned subsidiary of Lubrication Engineers, Inc., a company affiliated with Aurora Capital Partners, for a notable sum of $110 million.
This strategic move aims to focus on Calumet's core strengths while allowing it to retain and expand its consumer segment. The transaction will specifically include Royal Purple's impressive line of high-performance synthetic industrial products, which encompasses a variety of lubricants such as industrial gear lubricants, bio-environmental lubricants, stationary natural gas engine oils, hydraulic lubricants, and compressor oils. Furthermore, the deal grants an exclusive right to use the Royal Purple brand for industrial applications, enhancing the purchaser's market capabilities.
The Royal Purple industrial sector has showcased promise, generating approximately $29 million in sales for the fiscal year ending December 31, 2024. Despite this success, Calumet is choosing to streamline its operations to better position itself for future growth within its consumer segment, which includes renowned products like High Performance Motor Oil and other specialty lubricants targeted at automotive applications.
Scott Obermeier, Executive Vice President of Specialties at Calumet, commented on the significance of the deal: "This transaction is a reflection of our commitment to clarifying our business strategy. By shedding the industrial side of Royal Purple, we can concentrate on areas where we excel, particularly in our specialties business, which has been growing rapidly."
Calumet intends to utilize the proceeds from this sale primarily to pay down existing debt, enhancing the financial health of the company. The deal is predicted to finalize in the first half of 2025, contingent upon the standard closing conditions.
Todd Borgmann, the Chief Executive Officer, remarked, "This deal represents a strategic alignment for Calumet. Our top priority remains reducing our balance sheet's leverage, a goal which this transaction significantly supports. I want to express my gratitude to the Royal Purple industrial team for their dedication and hard work that contributed to the brand's success."
Moelis & Company LLC took on the role of exclusive financial advisor during the negotiations, while Faegre Drinker provided legal counsel on the matter.
Calumet, an established player in the specialty products and renewable fuels market, operates across various sectors for both industrial and consumer markets. The next steps for Calumet will be closely watched as they execute this unprecedented shift, which promises promising adjustments to its business model. As the company navigates through these changes, the focus will remain firmly on bolstering its consumer offerings and enhancing shareholder value, setting the stage for an evolving corporate landscape. The increasing competition in industrial lubricants alongside rising consumer expectations in the automotive space will be challenging yet invigorating as Calumet pursues its strategic objectives.
This strategic move aims to focus on Calumet's core strengths while allowing it to retain and expand its consumer segment. The transaction will specifically include Royal Purple's impressive line of high-performance synthetic industrial products, which encompasses a variety of lubricants such as industrial gear lubricants, bio-environmental lubricants, stationary natural gas engine oils, hydraulic lubricants, and compressor oils. Furthermore, the deal grants an exclusive right to use the Royal Purple brand for industrial applications, enhancing the purchaser's market capabilities.
The Royal Purple industrial sector has showcased promise, generating approximately $29 million in sales for the fiscal year ending December 31, 2024. Despite this success, Calumet is choosing to streamline its operations to better position itself for future growth within its consumer segment, which includes renowned products like High Performance Motor Oil and other specialty lubricants targeted at automotive applications.
Scott Obermeier, Executive Vice President of Specialties at Calumet, commented on the significance of the deal: "This transaction is a reflection of our commitment to clarifying our business strategy. By shedding the industrial side of Royal Purple, we can concentrate on areas where we excel, particularly in our specialties business, which has been growing rapidly."
Calumet intends to utilize the proceeds from this sale primarily to pay down existing debt, enhancing the financial health of the company. The deal is predicted to finalize in the first half of 2025, contingent upon the standard closing conditions.
Todd Borgmann, the Chief Executive Officer, remarked, "This deal represents a strategic alignment for Calumet. Our top priority remains reducing our balance sheet's leverage, a goal which this transaction significantly supports. I want to express my gratitude to the Royal Purple industrial team for their dedication and hard work that contributed to the brand's success."
Moelis & Company LLC took on the role of exclusive financial advisor during the negotiations, while Faegre Drinker provided legal counsel on the matter.
Calumet, an established player in the specialty products and renewable fuels market, operates across various sectors for both industrial and consumer markets. The next steps for Calumet will be closely watched as they execute this unprecedented shift, which promises promising adjustments to its business model. As the company navigates through these changes, the focus will remain firmly on bolstering its consumer offerings and enhancing shareholder value, setting the stage for an evolving corporate landscape. The increasing competition in industrial lubricants alongside rising consumer expectations in the automotive space will be challenging yet invigorating as Calumet pursues its strategic objectives.
Topics General Business）
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