Ashland results mark exit from petroleum

By Lisa Sanders, MarketWatch
Last Update: 6:20 PM ET July 25, 2005

NEW YORK (MarketWatch) -- Ashland Inc. reported a sharp jump in third-quarter net income Monday, boosted by a $1.5 billion gain on the sale of the company's 38% stake in Marathon Ashland Petroleum and 60 Valvoline oil-change centers.

Shares of Covington, KY - based Ashland (ASH) fell 20 cents to close at $61.79.

In the third quarter ended June 30, Ashland said it earned $1.8 billion, including the gain.   A year, ago net income rang in at $161 million.

Excluding the gain, net income was $231 million, or $3.09 a share, compared to $161 million, or $2.26 a share, for the year-ago quarter.   Revenue rose to $2.8 billion from $2.4 billion.

A survey by Thomson First Call shows analysts' average estimate at earnings of $2.13 a share and revenue of $2.7 billion.

"The completion of the MAP transaction marked an extraordinary milestone in Ashland's history," said James J. O'Brien, chairman and CEO, in a statement. "After 81 years in the petroleum refining and marketing industry, Ashland is now focused on growth as a two-sector company with operations in chemicals and transportation construction."

Ashland used proceeds from the deal with Marathon Oil Corp. to repay most of its debt.

Earnings from chemicals rose 40% and profit from transportation construction grew 7% from improved margins. Strong margins boosted income from refining and marketing by 41% on a year-over-year basis.

As for Ashland's ongoing businesses, operating income amounted to $99 million in the latest quarter, down from $292 million in the year-ago third quarter.   However, the year ago numbers include income from operations sold as part of the MAP transaction.

-*-     -*-     -*-

Ashland Inc. Closes MAP Transaction With Marathon Oil Corporation

Thursday June 30, 4:45 pm ET

COVINGTON, Ky., June 30 /PRNewswire-FirstCall/ -- Ashland Inc. (NYSE: ASH - News) today announced the completion of its previously announced agreement with Marathon Oil Corporation (NYSE: MRO - News) to transfer Ashland's 38-percent interest in Marathon Ashland Petroleum LLC (MAP) and two other businesses to Marathon Oil Corporation in a transaction valued at approximately $3.7 billion. The two other businesses are Ashland's maleic anhydride business and 60 Valvoline Instant Oil Change (VIOC) centers in Michigan and northwest Ohio.

As a result of this transaction: - Ashland shareholders of record as of the close of business on June 30, 2005, will receive .2364 Marathon shares per Ashland share. In total, Ashland's shareholders will receive 17,538,815 shares of Marathon common stock with an aggregate value of $938 million based upon the June 29 closing price of Marathon stock. - Ashland received cash of $2,406 million and MAP accounts receivable valued at $911 million. These amounts include approximately $2.8 billion of cash and accounts receivable included in the $3.7 billion transaction value, and $518 million of cash and accounts receivable representing 38 percent of MAP's distributable cash as of June 30, 2005.

From March 18, 2004, through May 31, 2005, MAP had suspended quarterly cash distributions to Ashland and Marathon. As previously announced, on May 31 Ashland received a cash distribution from MAP of $268 million.

"Today, we have completed one of our key strategic objectives," said James J. O'Brien, Ashland's chairman and chief executive officer. "This transaction demonstrates Ashland's commitment to deliver long-term value to our shareholders and brings to a close a long and notable chapter of our history in petroleum refining and marketing."

As previously announced, Ashland intends to use a substantial portion of the transaction proceeds to retire all or most of the company's outstanding debt and certain other financial obligations. Today, the company has repaid $2.1 billion of debt or debt-like obligations; approximately $400 million of obligations are expected to be repaid in the September quarter or early in the December quarter.

The above transactions are expected to result in a net increase in Ashland's cash and investment securities of approximately $1.1 billion. This reflects the $2,406 million in cash and $911 million of accounts receivable received in the transaction, the $268 million cash distribution received on May 31 and the repayment of approximately $2.5 billion of debt and other financial obligations.

Ashland currently does not anticipate that it will be obligated to pay any tax under Internal Revenue Code Section 355(e) in connection with this transaction. Whether Ashland is required to pay any such taxes will depend upon, among other things, the trading price of new Ashland stock on July 1, and the final adjusted tax basis of new Ashland stock, which will be determined after July 1.

Ashland shareholders of record on June 30, 2005, will automatically receive new Ashland shares within the next few weeks. In addition, a letter of transmittal and instructions for exchanging old Ashland shares for shares of Marathon stock will be mailed in July to the Ashland shareholders of record on June 30, 2005. Ashland shareholders who have shares deposited into a brokerage account will not need to do anything to receive their new Ashland or Marathon stock. The Depository Trust Corporation (DTC) will exchange the shares they hold directly with National City Bank, the Exchange Agent, who in turn will send DTC the new Ashland and Marathon shares.

"We are entering an exciting new era for Ashland," said O'Brien. "Our wholly-owned businesses are well positioned in markets having significant opportunities for continued growth. As such, we will focus first and foremost on organic growth. When acquisitions provide the opportunity to strengthen our core businesses and to deliver economic value to our shareholders, we will carefully consider them. As always, we will look to the creativity and knowledge of Ashland people to realize our potential. I am privileged to lead this great team."

With the completion of this transaction, Ashland will operate as two Sectors - Chemical and Transportation Construction. The Chemical Sector provides innovative product and service solutions in adhesives; composite polymers; metal casting solutions; water treatment; Valvoline® premium motor oil and car care products; and chemicals and plastics distribution. The Transportation Construction Sector, commercially known as Ashland Paving And Construction, Inc. (APAC), is a major supplier of construction materials including crushed aggregates and asphaltic concrete; and is one of the nation's largest transportation construction contractors, doing business in 14 southern and mid-western states.

Ashland Inc. (NYSE: ASH - News) is a Fortune 500 chemical and transportation construction company providing products, services and customer solutions throughout the world. To learn more about Ashland, visit www.ashland.com.

Forward-Looking Statements

This news release contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, with respect to Ashland's operating performance. These estimates are based upon a number of assumptions, including those mentioned within this news release. Such estimates are also based upon internal forecasts and analyses of current and future market conditions and trends, management plans and strategies, weather, operating efficiencies and economic conditions, such as prices, supply and demand, cost of raw materials, and legal proceedings and claims (including environmental and asbestos matters). Although Ashland believes its expectations are based on reasonable assumptions, it cannot assure the expectations reflected herein will be achieved. This forward-looking information may prove to be inaccurate and actual results may differ significantly from those anticipated if one or more of the underlying assumptions or expectations proves to be inaccurate or is unrealized or if other unexpected conditions or events occur. Other factors and risks affecting Ashland are contained in Ashland's Form 10-K, as amended, for the fiscal year ended Sept. 30, 2004. Ashland undertakes no obligation to subsequently update or revise the forward-looking statements made in this news release to reflect events or circumstances after the date of this release.

Additional Information about the MAP Transaction

The registration statement containing the proxy statement/prospectus relating to the transaction was declared effective by the SEC on May 20, 2005. The definitive proxy statement/prospectus relating to the transaction was filed with the SEC on May 25, 2005 and was mailed on May 27, 2005 to shareholders of record as of May 12, 2005. Investors and security holders are urged to read those documents and any other relevant documents filed or that will be filed with the SEC as they become available, because they contain, or will contain, important information. Security holders may obtain a free copy of the definitive proxy statement/prospectus and other documents filed with the SEC by Ashland, ATB Holdings and New EXM at the SEC's website at www.sec.gov. The definitive proxy statement/prospectus and other documents filed with the SEC by Ashland, ATB Holdings and New EXM may also be obtained for free in the SEC filings section on Ashland's Investor Relations website at www.ashland.com/investors, or by directing a request to Ashland at 50 E. RiverCenter Blvd., Covington, KY 41012. The respective directors and executive officers of Ashland and other persons may be deemed to be participants in solicitation of proxies in respect of the proposed transaction. Information regarding Ashland's directors and executive officers is available in its proxy statement filed with the SEC by Ashland on December 14, 2004. Investors may obtain information regarding the interests of participants in the solicitation of proxies in connection with the transaction referenced in the foregoing information by reading the definitive proxy statement/prospectus.

-*-     -*-     -*-

PR Newswire

Ashland Signs Amended Agreement to Transfer Interest in MAP to Marathon for $3.7 Billion

28 Apr 2005, 7:06 AM ET

- Delivers $915 Million in Marathon Stock Directly to Ashland Shareholders - Transaction Remains Tax-Free to Ashland Shareholders - Marathon Agrees to Pay up to the First $200 Million in Certain Taxes COVINGTON, Ky., April 28 /PRNewswire-FirstCall/ -- Ashland Inc. (NYSE: ASH) today announced that it has amended its agreement to transfer its 38-percent interest in Marathon Ashland Petroleum LLC (MAP) and two other businesses to Marathon Oil Corporation (NYSE: MRO). Under the amended agreement, Ashland's interest in these businesses is valued at approximately $3.7 billion compared to approximately $3 billion in the earlier agreement, with substantially all the increase in value going directly to Ashland's shareholders in the form of Marathon stock. In addition, Marathon has agreed to pay the first $200 million of any Section 355(e) tax, if any, as compared to the prior agreement where Ashland bore full responsibility for any Section 355(e) tax. The transaction is expected to be tax free to Ashland's shareholders and tax efficient to Ashland. The two other businesses are Ashland's maleic anhydride business and 60 Valvoline Instant Oil Change (VIOC) centers in Michigan and northwest Ohio, which are valued at $94 million.

Under the terms of the amended agreement, Ashland's shareholders will receive Marathon common stock with an aggregate value of $915 million. Based on the number of shares outstanding on March 31, 2005, shareholders would receive $12.56 in Marathon stock per Ashland share. Ashland will receive cash and MAP accounts receivable totaling $2.8 billion. In addition, MAP has not made quarterly cash distributions to Ashland and Marathon since March 18, 2004, and such distributions will continue to be suspended until the closing of the transaction. As a result, the final amount of cash to be received by Ashland will be increased by an amount equal to 38 percent of the cash accumulated from operations during the period prior to closing. At March 31, 2005, Ashland's share of this accumulated cash was $560 million.

Under the terms of the earlier agreement, the closing was conditioned on receipt of private letter rulings from the Internal Revenue Service with respect to certain tax issues. Under the terms of the amended agreement, Ashland and Marathon expect to enter into a closing agreement with the IRS that will resolve these tax issues. Under the closing agreement, the retention by Ashland of certain contingent liabilities related to previously-owned businesses will reduce Ashland's tax basis. The company estimates this basis reduction may increase any Section 355(e) tax on the transaction by approximately $66 million. Marathon has agreed to pay the first $200 million of any Section 355(e) tax. Ashland would pay up to the next $175 million of Section 355(e) tax, if required. Any remaining Section 355(e) tax would be shared equally by Ashland and Marathon. Based on the number of Ashland shares outstanding as of March 31, 2005, and the company's current estimate of Ashland's tax basis, the company expects that Ashland would be required to pay Section 355(e) tax only if Ashland's stock price on the closing date exceeds approximately $74.50 per share.

Ashland intends to use a substantial portion of the transaction proceeds to retire all or most of the company's outstanding debt and certain other financial obligations. After payment of these obligations and including the company's current estimate of MAP's final cash distribution, Ashland expects to have a net cash position of roughly $1.1 billion.

"We are pleased that our amended agreement provides an additional $700 million in value, $600 million of which will go directly to our shareholders," said James J. O'Brien, Ashland's chairman and chief executive officer. "Ashland's Board of Directors took a comprehensive look at the alternatives available to Ashland with respect to our ownership interest in MAP. We concluded that this tax efficient structure with an appropriate increase in shareholder value, as well as a significant reduction of Ashland's tax risk, was the best alternative."

Mr. O'Brien also noted that Ashland has enjoyed good working relationships with both Marathon and MAP management. "I want to thank Marathon for the successes we've shared through the MAP joint venture," said Mr. O'Brien. "We look forward to continuing our mutually beneficial business relationship as both a supplier and customer."

Mr. O'Brien added, "While Ashland has been pleased with MAP's performance, the transfer of our interest in MAP to Marathon is an important step in achieving Ashland's strategic objectives. We will have greater financial flexibility to pursue organic growth and will focus on selectively pursuing acquisitions that complement and strengthen our core businesses. I am confident that Ashland is well-positioned to create long-term value and to achieve our goal of top-quartile performance."

The transaction is subject to, among other things, approval by Ashland's shareholders, consent from public debt holders, finalization of the closing agreement with the Internal Revenue Service and customary antitrust review. Ashland and Marathon have agreed to use their reasonable best efforts to complete the transaction by June 30, 2005, with the termination date for the transaction extended to September 30, 2005.

After the close of its transaction with Marathon, Ashland will own four divisions in two Sectors -- Chemical and Transportation Construction -- both of which are focused on meeting customers' needs, enabling growth through process improvement, and achieving top-quartile performance. The Chemical Sector, which includes the Ashland Distribution, Ashland Specialty Chemical and Valvoline divisions, is creating a sustainable, low- cost business model, providing a platform for effective integration of acquisitions and driving market expansion. To enable growth, the Sector is also focusing on innovative research and the development of new products and services.

The Transportation Construction Sector, commercially known as Ashland Paving And Construction, Inc. (APAC), is executing strategies that should help it to increase its share of major projects, strengthen its marketing and business development capabilities and improve operational efficiency.

"As we integrate Ashland's businesses, we continue to find new sources of competitive advantage, creating actionable strategies with measurable targets and operating as a unified organization," O'Brien said.

In connection with the transaction, Credit Suisse First Boston LLC acted as financial advisor, and Cravath, Swaine & Moore LLP acted as legal counsel to Ashland.

Analyst / Investor Teleconference Information
Today at 10:00 a.m. Eastern Time, Ashland will provide a live audio webcast of its teleconference with securities analysts. The call will be hosted by William E. Henderson, III, director of investor relations. Participants will include James J. O'Brien, chairman and chief executive officer, J. Marvin Quin, senior vice president and chief financial officer, David L. Hausrath, senior vice president, general counsel and corporate secretary, and Stephen L. Gordon, tax partner, Cravath, Swaine & Moore LLP.

The webcast may be accessed online at http://www.ashland.com. A limited number of telephone lines also will be available by dialing (800) 299-7635 from inside the U.S. or (617) 786-2901 if dialing from outside the U.S., and entering passcode 41504855.

The webcast replay and an archived version of the presentation will be available online at http://www.ashland.com/investors. A telephone audio replay will be available from 12:00 p.m. ET on April 28, 2005, through May 5, 2005, by dialing (888) 286-8010 from inside the U.S. or (617) 801-6888 from outside the U.S. (passcode 94770405).

About Ashland
Ashland (NYSE: ASH) is a Fortune 500 transportation construction, chemicals and petroleum company providing products, services and customer solutions throughout the world. To learn more about Ashland, visit http://www.ashland.com.

Forward-Looking Statements
This news release contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include those that refer to Ashland's expectations about the MAP transaction. Although Ashland believes its expectations are based on reasonable assumptions, it cannot assure the expectations reflected herein will be achieved. The risks, uncertainties, and assumptions include the possibility that Ashland will be unable to fully realize the benefits anticipated from the MAP transaction; the possibility the transaction may not close including as a result of failure to finalize the closing agreement with the Internal Revenue Service or failure of Ashland to obtain the approval of its shareholders; the possibility that Ashland may be required to modify some aspect of the transaction to obtain regulatory approvals; and other risks that are described from time to time in the Securities and Exchange Commission (SEC) reports of Ashland. Other factors and risks affecting Ashland are contained in Ashland's Form 10-K, as amended, for the fiscal year ended Sept. 30, 2004, filed with the SEC and available on Ashland's Investor Relations website at http://www.ashland.com/investors or the SEC's website at http://www.sec.gov. Ashland undertakes no obligation to subsequently update or revise the forward-looking statements made in this news release to reflect events or circumstances after the date of this news release.

Additional Information about the MAP Transaction
In connection with the proposed transaction, Ashland filed a preliminary proxy statement on Schedule 14A with the SEC on June 21, 2004 and an amended preliminary proxy statement on Schedule 14A on August 31, 2004. ATB Holdings Inc. and New EXM Inc. filed a registration statement on Form S-4, which includes a further amended preliminary proxy statement/prospectus, with the SEC on October 12, 2004. Investors and security holders are urged to read those documents and any other relevant documents filed or that will be filed with the SEC, including the definitive proxy statement/prospectus regarding the proposed transaction as they become available, because they contain, or will contain, important information. The definitive proxy statement/prospectus will be filed with the SEC by Ashland, and security holders may obtain a free copy of the definitive proxy statement/prospectus when it becomes available, and other documents filed with the SEC by Ashland, including the preliminary proxy statement at the SEC's website at http://www.sec.gov. The definitive proxy statement/prospectus, and other documents filed with the SEC by Ashland, including the preliminary proxy statement, may also be obtained for free in the SEC filings section on Ashland's Investor Relations website at http://www.ashland.com/investors, or by directing a request to Ashland at 50 E. RiverCenter Blvd., Covington, KY 41012. The respective directors and executive officers of Ashland and other persons may be deemed to be participants in solicitation of proxies in respect of the proposed transaction. Information regarding Ashland's directors and executive officers is available in its proxy statement filed with the SEC by Ashland on December 14, 2004. Investors may obtain information regarding the interests of participants in the solicitation of proxies in connection with the transaction referenced in the foregoing information by reading the definitive proxy statement/prospectus when it becomes available.

Appendix: Ashland to transfer interest in MAP to Marathon for $3.7 Billion Transaction Steps Under the terms of the earlier agreement, the issuance of New Ashland Inc. common stock and Marathon common stock to Ashland's shareholders would have been accomplished through the merger (a separation merger) of HoldCo and a subsidiary of Marathon. The earlier agreement also contemplated that such issuance could occur through the distribution of New Ashland Inc. common stock by HoldCo to Ashland's shareholders followed by the issuance of Marathon common stock to Ashland's shareholders through the merger of HoldCo and a subsidiary of Marathon. To clarify the tax treatment of the transaction, the IRS has required that these issuances be accomplished through the distribution and subsequent merger rather than through a separation merger. Accordingly, under the terms of the amended agreement, the transaction would be accomplished through a series of steps, which would all occur on the day of closing and in the following order:

1. MAP would redeem a portion of Ashland's 38-percent interest in MAP for a redemption price of approximately $900 million*, consisting of cash and MAP accounts receivable. Because MAP has not made quarterly cash distributions since March 18, 2004, this redemption price would increase by an amount equal to 38 percent of the cash accumulated from MAP's operations prior to the closing. 2. Ashland would contribute the maleic anhydride business and 60 Valvoline Instant Oil Change centers to a newly formed subsidiary of Ashland ("HoldCo"). 3. Ashland would contribute to HoldCo its remaining interest in MAP. 4. As a preliminary step to the final formation of New Ashland Inc., Ashland would be merged with New Ashland LLC, a subsidiary of HoldCo. By virtue of this merger, each share of Ashland common stock would be converted into one share of HoldCo common stock. 5. Marathon would arrange for a borrowing by HoldCo of $1.9 billion*, which would be expressly non-recourse to New Ashland LLC and would otherwise be made on terms and conditions reasonably acceptable to Ashland. HoldCo would contribute to New Ashland LLC the proceeds of the borrowing. 6. New Ashland LLC would be merged with and into New Ashland Inc., which would survive the merger. New Ashland Inc. would be a wholly owned subsidiary of HoldCo. 7. By virtue of the merger, each New Ashland LLC membership interest would be converted into a number of shares of New Ashland Inc. common stock equal to the quotient of (1) the number of shares of HoldCo common stock outstanding prior to the Conversion Merger divided by (2) the number of New Ashland LLC membership interests outstanding prior to the Conversion Merger. All shares of New Ashland Inc.. common stock held by HoldCo immediately prior to the Conversion Merger would no longer be outstanding, would automatically be canceled and retired and would cease to exist. 8. HoldCo would distribute shares of New Ashland Inc. common stock to the shareholders of Ashland (holding HoldCo shares at the effective time of the distribution) on the basis of one share of New Ashland Inc. common stock for each outstanding share of HoldCo common stock. As a result of the distribution, shares of New Ashland Inc. common stock will be held by the shareholders of Ashland common stock. New Ashland Inc. will receive the proceeds of the partial redemption and the capital contribution and own all of Ashland's existing businesses, properties and assets other than Ashland's interests in MAP, the maleic anhydride business and the 60 VIOC centers contributed to HoldCo as described above (#2). 9. HoldCo would be merged into a newly formed subsidiary of Marathon, which would survive the merger. By virtue of the merger of HoldCo and the Marathon subsidiary, the former Ashland shareholders (now holding HoldCo shares) would have the right to receive, for each share of HoldCo common stock, a pro rata amount of shares of Marathon common stock with a total value of $915 million (based on a 20-trading day averaging period preceding the closing). As provided in the earlier agreement, the transaction is conditioned on the Ashland and HoldCo Boards of Directors determination prior to closing that the distribution described in Step 8 above is in compliance with all applicable law.

* Note - The separate amounts received from MAP and HoldCo could vary from these stated amounts, but in any event, the combination would equal approximately $2.7 billion. Tax Issues Under the terms of the earlier agreement, it was a condition to the closing of the transaction that Ashland and Marathon receive private letter rulings from the IRS with respect to certain tax issues and that Ashland and Marathon receive either private letter rulings from the IRS or opinions of counsel with respect to other tax issues. Ashland and Marathon have had extensive discussions with the IRS concerning the transaction and expect to enter into a closing agreement with the IRS that will favorably address all these tax issues with the one exception noted below. The closing agreement would be a binding agreement between Ashland, Marathon and the IRS. The closing agreement, once finalized, would satisfy the tax-related closing conditions to the transaction.

Section 355(e) of the Internal Revenue Code imposes a corporate-level tax on New Ashland Inc. to the extent that the fair market value of the stock of New Ashland Inc. on the closing date exceeds the tax basis of that stock. Under the closing agreement, the retention by Ashland of certain contingent liabilities related to previously-owned businesses (including environmental liabilities, asbestos indemnity liabilities, post-retirement benefit costs and other items) would result in a reduction of that basis, which may increase the amount of Section 355(e) tax imposed on the transaction. Ashland's current estimate of the tax basis of the stock of New Ashland Inc. after giving effect to the reduction for contingent liabilities is approximately $4 billion. The company currently estimates, based on a combined Federal and State tax rate of 39 percent and assuming the entire estimated contingent liability basis reduction results in taxable Section 355(e) gain, that the tax liability attributable to the basis reduction would be approximately $66 million.

Marathon has agreed to pay the first $200 million of all Section 355(e) tax; this $200 million amount would be increased to the extent the tax arising from the contingent liability basis reduction exceeds $75 million. Ashland would pay up to the next $175 million of Section 355(e) tax, if any. Any remaining Section 355(e) tax would be shared equally by Ashland and Marathon.

Based on Ashland's estimates, neither Ashland nor Marathon would have any Section 355(e) tax to pay unless the New Ashland Inc. stock price on the closing date exceeds approximately $55 per share, which is expected to correspond to an Ashland stock price of approximately $67.50 per share ($54.94 of New Ashland Inc. stock plus $12.56 of Marathon stock based on the numbers of shares of Ashland stock outstanding as of March 31, 2005). Ashland also estimates that it would pay Section 355(e) tax only if the New Ashland Inc. stock price on the closing date exceeds approximately $62 per share, which is expected to correspond to an Ashland stock price of approximately $74.50 per share.

SOURCE Ashland Inc. -0- 04/28/2005 /CONTACT: Media Relations - Jim Vitak, +1-614-790-3715, jevitak@ashland.com; Investor Relations - Bill Henderson, +1-859-815-4454, wehenderson@ashland.com, both of Ashland Inc./ /Company News On-Call: http://www.prnewswire.com/comp/065263.html / /Photo: http://www.newscom.com/cgi-bin/prnh/20040113/ASHLANDLOGO AP Archive: http://photoarchive.ap.org PRN Photo Desk, photodesk@prnewswire.com / /Web site: http://www.ashland.com / (ASH MRO) CO: Ashland Inc.; Marathon Oil Corporation ST: Kentucky IN: OIL SU: TNM CCA MC -- NYTH120 -- 8746 04/28/2005 07:05 EDT http://www.prnewswire.com

-*-     -*-     -*-

14 February 2005

Ashland upgraded by Friedman Billings

Friedman Billings upgrades Ashland Inc. stock from Mkt. Perform to Outperform.

-*-     -*-     -*-

Ashland, Marathon say deal depends on IRS ruling

Tue Feb 8, 2005 06:03 PM ET

LOS ANGELES, Feb 8 (Reuters) - Oil refining and chemicals company Ashland Inc. on Tuesday said a $3 billion deal to sell its stake in refining joint venture Marathon Ashland Petroleum LLC to Marathon Oil Corp. continues to hinge on a favorable Internal Revenue Service ruling.

Ashland said the two companies have continued discussions with the IRS, including modifications of the proposed transaction that would allow a tax efficient transfer of Ashland's interest to Marathon.

The modifications would require the companies to amend terms of the deal and there can be no assurance that an agreement on a modified transaction will be reached, Ashland said in a statement. If an agreement is reached, it is likely that the transaction would close in the second quarter of 2005, the company said.

© Reuters 2005. All Rights Reserved

-*-     -*-     -*-

Dec. 20, 2004, 10:52PM

Ashland buyout in doubt
Expected ruling by IRS threatens Marathon deal

By NELSON ANTOSH
Copyright 2004 Houston Chronicle

An anticipated tax ruling from the Internal Revenue Service threatens to derail Marathon Oil's nearly $3 billion buyout of Ashland's 38 percent interest in Marathon Ashland Petroleum.

The companies have said since the deal was announced in March that it was dependent on getting favorable tax rulings from the IRS.

Ashland said in a prepared statement Monday from its headquarters in Covington, Ky., that the company now "believes that it is unlikely that the previously announced transaction will close." A spokesman did not return calls asking for elaboration.

The issues have already caused a delay in the transaction that was projected to close before the end of this year.

A call Friday from the IRS indicated that it does not intend to go along on one issue, that being the calculation of a gain. The method suggested by the IRS would result in an uncertain tax liability for Ashland.

It is expected to make the final decision in what is called a private letter ruling.

"We have nothing in writing; we have to assume that a decision is pretty close," said Marathon spokesman Ken Matheny in Houston. "We take the phone call very seriously."

Ashland believes that with exception of the complex liability issue, the IRS will go along with the other requests necessary to close the deal, it said in a statement. The tax sum at stake was unclear.

Marathon's stock declined 21 cents to close Monday at $37.11, while Ashland's stock declined $1.03 to close at $56.67.

Both companies said Monday they will consider other alternatives, including more talks with the IRS.

"We disagree with IRS' position on this issue," Marathon said. It also is considering modifying the transaction, which would require approval by both boards of directors.

Standard & Poor's analyst John Thieroff expects Marathon to continue the pursuit.

At stake is 100 percent ownership of a lucrative venture that includes seven refineries, terminals, pipelines and more than 5,700 fueling stations, at a time when refining is highly profitable.

One option that Marathon can exercise would have it buying the assets for 15 percent above fair value, at that time.

"We would have to evaluate it. We like this company but will not do it at any price,"said Matheny.

For its part, Ashland said it is pleased with its ownership in Marathon Ashland Petroleum and has no plans to exercise its option to "put" its interest in Marathon Ashland Petroleum to Marathon.

Refining analyst Jacques Rousseau said in a November report that he expected the deal, in its current form, to die without gaining tax-free status.

He expects Marathon to make the purchase under the existing option agreement, which would boost the purchase price to around $3.6 billion.

Even at that, it would be a good acquisition, considering the high quality of the Marathon Ashland Petroleum assets, Rousseau said.

nelson.antosh@chron.com

-*-     -*-     -*-

Reuters

US clears Marathon to buy Ashland venture stake

Wednesday June 2, 2004 10:38 am ET

WASHINGTON, June 2 (Reuters) - U.S. antitrust authorities said on Wednesday they had approved Marathon Oil Corp.'s (NYSE:MRO) proposal to buy Ashland Inc.'s (NYSE:ASH) stake in their refining and marketing joint venture, Marathon Ashland Petroleum LLC.

Officials have closed their investigation of the deal without taking action, the Federal Trade Commission said in a notice.

When they announced the deal in March, the companies said Marathon would pay about $3 billion in cash and stock for Ashland's 38 percent stake in the joint venture.

Findlay, Ohio-based Marathon Ashland Petroleum is the No. 5 U.S. oil refiner, operating seven refineries with total capacity of 948,000 barrels of oil a day, interstate pipelines, and 6,000 service stations and truck stops. Marathon Ashland generated operating income of $770 million last year.

Under the two-step transaction, Houston-based oil company Marathon would pay $315 million in stock and transfer $794 million of Marathon cash and accounts receivable to Ashland, a Covington, Kentucky, chemicals, refining and transportation construction company.

Marathon would also hand over $1.9 billion raised in a debt offering, for a total payment of $2.7 billion in cash and receivables, the companies have said.

-*-     -*-     -*-

Ashland named in class action suit over resins

4:51 PM EDT Wednesday, May 12, 2004

Ashland Inc. said in a Securities and Exchange Commission filing Tuesday that it has been named a defendant in a class action civil case filed by foundry resins customers in federal district court in Illinois last month.

"Ashland will vigorously defend this action," the company said in the filing.

Company officials also said Ashland was subpoenaed in November regarding a foundry resins grand jury investigation. The U.S. Department of Justice's antitrust division is leading that investigation, Ashland said in the filing. The company is providing records to the grand jury.

Ashland spokesman James Vitak said he couldn't comment beyond the company's statement in the SEC filing.

Ashland's foundry resins operation is part of the company's Ashland Specialty Chemical unit. Foundry resins are used to hold sand together in molds used in metal casting.

Specialty chemicals generated $318 million in first-quarter sales, making up 17 percent of Ashland's total sales. The unit netted $19 million in operating income.

Ashland's stock fell 91 cents, or 1.9 percent, to close at $45.44 per share in May 12 trading.

-*-     -*-     -*-

Ashland upgraded by Friedman Billings

22-Mar-04, Friedman Billings - Upgrade from Underperform to Market Perform

-*-     -*-     -*-

Marathon Oil sells 30 million shares of its common stock.

22-Mar-04, Marathon Oil said Monday that it has initiated a public offering of 30 million shares of its common stock. Marathon starts 30 mln share offering. Marathon Oil Corp (MRO) plans to use the proceeds to help retire debt related to its $2.93 billion acquisition of Ashland's (ASH) minority interest in their joint venture, which was announced on Friday.

-*-     -*-     -*-

Ashland Inc. Agrees to Transfer Interest in MAP to Marathon Oil Corporation

Friday - March 19, 2004

Ashland Inc. Agrees to Transfer Interest in MAP to Marathon Oil Corporation in Tax-free Transaction; Company Provides Update on Core Businesses

Covington, Ky. - Ashland Inc. (NYSE: ASH) today announced that it has signed an agreement under which Ashland will transfer its 38 percent interest in Marathon Ashland Petroleum LLC (MAP) and two other businesses to Marathon Oil Corporation in a transaction structured to be tax free and valued at approximately $3.0 billion.  The two other businesses are Ashland's maleic anhydride business and 61 Valvoline Instant Oil Change (VIOC) centers in Michigan and northwest Ohio, which are valued at $94 million.

Under the terms of the agreement, Ashland's shareholders would receive Marathon common stock with a value of $315 million (or approximately $4.50 per Ashland share based on the number of shares currently outstanding).  Ashland would receive cash and MAP accounts receivable totaling $2.7 billion. MAP will not make quarterly cash distributions to Ashland and Marathon between now and the closing of the transaction.  As a result, the final amount received by Ashland would be increased by an amount equal to 38 percent of the cash accumulated from operations during the period prior to closing. Ashland would use a substantial portion of the transaction proceeds to retire all or most of the company's outstanding debt and certain other financial obligations.   After payment of these obligations, Ashland would have a material net cash position.

The transaction is subject to, among other things, approval by Ashland's shareholders, customary antitrust review, consent from public debt holders and receipt of a favorable private letter ruling from the Internal Revenue Service with respect to the tax treatment of the transaction.   There is meaningful risk that the transaction will not receive the favorable ruling from the IRS, in which case the transaction would not proceed.  However, Ashland believes it is more likely than not that this transaction will receive a favorable ruling.  If these conditions are met, the transaction is expected to close by the end of the 2004 calendar year.

"This transaction represents the best opportunity for Ashland and its shareholders to capture the value that has been created through this joint venture," said James J. O'Brien, Ashland's chairman and chief executive officer.  "While we have been pleased with both the performance of the joint venture and our relationship with Marathon, the transfer of our interest in MAP to Marathon is an important step in achieving our strategic objectives."

In connection with the transaction, Credit Suisse First Boston LLC acted as financial advisor, and Cravath, Swaine & Moore LLP acted as legal counsel to Ashland.

Business Update
The improved performance of Ashland's wholly-owned divisions in the first quarter continued into the second quarter of fiscal 2004.

Ashland's Transportation Construction sector (Ashland Paving And Construction, Inc., or "APAC®") anticipates improved performance for the quarter ending March 2004, although its results for the quarter reflect seasonal winter weakness.  APAC is expecting a loss in the range of $30 million to $40 million compared to the $57 million loss for the March 2003 quarter. Going forward, APAC will focus on improving its performance in the near term and in the longer-term on major project capabilities and expanding both within and adjacent to its current geographic markets.  Ashland believes that APAC is well-positioned to benefit from the expanded highways spending legislation that is currently under Congressional review.

Ashland's Chemicals sector includes Ashland Distribution, Ashland Specialty Chemical (thermoset resins and water technologies businesses) and Valvoline.  These divisions remain focused on creating innovative products and solutions, maintaining a low cost structure and expanding their markets.  The Chemicals sector continues to perform well and anticipates operating income for the March quarter in the range of $50 million to $55 million, compared to $30 million in the March quarter of last year.

Each division within the Chemicals sector expects increased operating income for the March quarter, with the largest improvements projected by Ashland Distribution and Ashland Specialty Chemical.  Ashland Distribution's growth has been driven by consistent sales volume increases.   Ashland Specialty Chemical's growth is due in part to new product introductions, such as new additions to the MAXGUARD® marble clear gel coat and POLARIS® resin lines.  These products enable Ashland to work proactively with manufacturers to optimize their entire cast marble, onyx or solid surface fabrication processes. Valvoline's momentum is built on its successful premium products strategy, and the division continues to introduce new, customer-focused products and services, contributing to its consistent top-line growth. For example, VIOC - which owns and franchises more than 740 stores nationwide - recently launched a fleet management program that incorporates both VIOC and other vendors' maintenance records into a comprehensive service history.   "Much of the progress we have made in the past year is due to the hard work and dedication of our employees," said Mr. O'Brien.  "I would like to thank them for their continuing effort as we focus on the execution of our strategies.

"Our disciplined investment approach will focus on expanding and strengthening our core businesses through organic growth," continued Mr. O'Brien.  "We have already made significant progress in improving our core operations, and I am confident that Ashland is well-positioned to create long-term value in our wholly owned divisions and to achieve our goal of top-quartile performance."

Analyst / Investor Teleconference Information
Today at 10:00 a.m. Eastern Time, Ashland will provide a live audio webcast of its teleconference with securities analysts. The call will be hosted by William E. Henderson, III, director of investor relations. Participants will include James J. O'Brien, chairman and chief executive officer, and J. Marvin Quin, senior vice president and chief financial officer. The webcast may be accessed online at www.ashland.com .  A limited number of telephone lines also will be available by dialing (800) 901-5231 from inside the U.S. or (617) 786-2961 if dialing from outside the U.S., and entering passcode 82740514.

The webcast replay and an archived version of the presentation will be available online at www.ashland.com/investors .  A telephone audio replay will be available through March 26, 2004 by dialing (888) 286-8010 from inside the U.S. or (617) 801-6888 from outside the U.S. (passcode 46893461).

About Ashland
Ashland (NYSE: ASH) is a Fortune 500 transportation construction, chemicals and petroleum company providing products, services and customer solutions throughout the world.  To learn more about Ashland, visit www.ashland.com .
Forward-Looking Statements
This news release contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  These statements include those that refer to Ashland's operating performance and expectations about this transaction, including those statements that refer to the expected benefits of the transaction to Ashland's shareholders.  Although Ashland believes its expectations are based on reasonable assumptions, it cannot assure the expectations reflected herein will be achieved.  These forward-looking statements are based upon internal forecasts and analyses of current and future market conditions and trends, management plans and strategies, weather, operating efficiencies and economic conditions, such as prices, supply and demand, cost of raw materials, and legal proceedings and claims (including environmental and asbestos matters) and are subject to a number of risks, uncertainties, and assumptions that could cause actual results to differ materially from those we describe in the forward-looking statements.  The risks, uncertainties, and assumptions include the possibility that Ashland will be unable to fully realize the benefits anticipated from the transaction; the possibility of failing to receive a favorable ruling from the Internal Revenue Service; the possibility that Ashland fails to obtain the approval of its shareholders; the possibility that the transaction may not close or that Ashland may be required to modify some aspect of the transaction to obtain regulatory approvals; and other risks that are described from time to time in the Securities and Exchange Commission reports of Ashland. Other factors and risks affecting Ashland are contained in Ashland's Form 10-K for the fiscal year ended Sept. 30, 2003, filed with the Securities and Exchange Commission (SEC) and available in Ashland's Investor Relations website at www.Ashland.com/investors or the SEC's website at www.sec.gov .  Ashland undertakes no obligation to subsequently update or revise the forward-looking statements made in this news release to reflect events or circumstances after the date of this release.

Additional Information About This Transaction
Investors and security holders are urged to read the proxy statement/prospectus regarding the proposed transaction when it becomes available because it will contain important information.  The proxy statement/prospectus will be filed with the SEC by Ashland, and security holders may obtain a free copy of the proxy statement/prospectus when it becomes available, and other documents filed with the SEC by Ashland, at the SEC's website at www.sec.gov .  The proxy statement/prospectus, and other documents filed with the SEC by Ashland, may also be obtained for free in the SEC filings section on Ashland's Investor Relations website at www.Ashland.com/investors , or by directing a request to Ashland at 50 E. RiverCenter Blvd., Covington, KY 41012.  The respective directors and executive officers of Ashland and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction.  Information regarding Ashland's directors and executive officers is available in its proxy statement filed with the SEC by Ashland on December 8, 2003.  Investors may obtain information regarding the interests of participants in the solicitation of proxies in connection with the transaction referenced in the foregoing information by reading the proxy statement/prospectus when it becomes available.

Appendix:
Ashland Inc. to transfer interest in MAP to Marathon Oil Corporation
Transaction Steps
The transaction would be accomplished through a series of steps, which would all occur on the day of closing and in the following order:
1. MAP Partial Redemption. MAP would redeem a portion of Ashland's 38% interest in MAP for a redemption price likely to be in the range of $900 million*, consisting of cash and MAP accounts receivable. Because MAP will not make quarterly cash distributions prior to the closing, such redemption price would increase by an amount equal to 38% of the cash accumulated from MAP's operations prior to closing.
2. Maleic/VIOC Contribution. Ashland would contribute the maleic anhydride business and 61 Valvoline Instant Oil Change centers to a newly formed subsidiary of Ashland ("HoldCo").
3. MAP Contribution. Ashland would contribute to HoldCo its remaining interest in MAP.
4. The Reorganization Merger. As a preliminary step to the final formation of New Ashland Inc., Ashland would be merged with and into New Ashland LLC, which would be the surviving business entity of that merger and a subsidiary of HoldCo. By virtue of this Reorganization Merger, each share of Ashland common stock would be converted into and represent one share of HoldCo common stock.
5. HoldCo Borrowing and Capital Contribution. Marathon would arrange for a borrowing by HoldCo of $1.8 billion*, which would be expressly non-recourse to New Ashland LLC and would otherwise be made on terms and conditions reasonably acceptable to Ashland.  HoldCo would contribute to New Ashland LLC the proceeds of the borrowing.
6. The Conversion Merger. New Ashland LLC would be merged with and into New Ashland Inc., which would survive the merger. New Ashland Inc. would be a wholly owned subsidiary of HoldCo.   The amount of the HoldCo borrowing would depend on the amount of Ashland financings outstanding at closing that the Internal Revenue Service would permit Ashland to pay down with the proceeds of the borrowing.  If the amount of this borrowing is increased (or decreased), the amount of the partial redemption would be decreased (or increased) accordingly
7. Separation and Merger. HoldCo would be merged into a newly formed subsidiary of Marathon, which would survive the merger. By virtue of the merger of HoldCo and the Marathon subsidiary, the former Ashland shareholders (now holding HoldCo shares) would have the right to receive, for each share of HoldCo common stock, (1) one share of New Ashland Inc. common stock and (2) a pro rata amount of shares of Marathon common stock with a total value of $315 million (based on a 20-trading day averaging period preceding the closing). For tax purposes, this merger will be treated as a spin-off of New Ashland to shareholders followed by the merger of HoldCo into the Marathon subsidiary.
* Note - The separate amounts received from MAP and HoldCo could vary from these stated amounts, but in any event, the combination would equal approximately $2.7 billion.

Tax Issues
The receipt of the following favorable rulings from the IRS is a condition to closing:
1. The form of the transaction will be respected as a redemption, followed by a tax-free spin-off and merger.
2. The assumption of HoldCo borrowing by Marathon will not be taxable to New Ashland.
3. Either New Ashland or Marathon will be entitled to tax deductions for future payments of Ashland's liabilities associated with discontinued business operations, including asbestos, environmental, post-retirement benefits, and other items.
4. The tax basis in New Ashland will not be reduced by the assumption of liabilities associated with discontinued business operations in a way that would cause additional taxable Section 355(e) gain to be recognized by Ashland.
* There are other tax issues on which the transaction would proceed on the basis of opinions from outside tax counsel, Cravath, Swaine & Moore LLP.
* Note - Although Ashland expects the transaction to be tax free to Ashland and its shareholders, a tax under Internal Revenue Code Section 355(e) would be imposed on Ashland if the market value of New Ashland at closing exceeds the tax basis in New Ashland.  That tax basis will change between the date of signing and the date of closing based on a number of factors, including results from operations of Ashland's wholly owned divisions and the accumulated amount of foregone MAP distributions. Based on current estimates, Ashland would begin paying taxes to the extent the Ashland stock price at closing exceeds $55.50 based on the number of Ashland shares currently outstanding. This $55.50 includes $4.50 in value for the Marathon stock that would be issued to Ashland's shareholders.  Any taxes paid would likely be modest compared to the size of the transaction.

-*-     -*-     -*-

O'Brien elected Ashland Inc. CEO effective October 1, 2002

September 19, 2002
Covington, Ky. -- Ashland Inc. (NYSE:ASH) announced today that Ashland President and Chief Operating Officer James J. O'Brien has been elected chief executive officer effective Oct. 1. As previously announced, he will become chairman of the board effective Nov. 15 when the company's current chairman, Paul W. Chellgren, retires.

"With his 26 years of experience, Jim is an excellent choice, and I was pleased to recommend him to our board, which then moved very quickly, on Aug. 13, to name him president and chief operating officer and as my successor. This is a strong signal of their confidence in him and the rest of the management team," Chellgren said. "The team is working together very effectively, and the transition has gone extremely well. Consequently, the board and I decided to move up the date of his succession as CEO to enable the team to be in place at the beginning of our new fiscal year. This is a natural and logical starting point for a new CEO. Ashland also followed a similar two-step succession process in 1996,"said Chellgren. "I am gratified by the board's confidence in me and excited by the prospect of getting started," O'Brien said. "Our team is already at work making plans. We're energized and eager to build on Ashland's rich heritage to create an even more exciting and stronger future for the company, its customers, its owners and employees"

Effective Oct. 1, O'Brien will hold the position of president and chief executive officer. On Nov. 15, he will become chairman and chief executive officer.

O'Brien joined the company in 1976 and served in assignments of increasing responsibility within Ashland's specialty chemical and distribution operations. O'Brien was former Ashland Inc. chairman and CEO John R. Hall's executive assistant in 1992, a position he held until 1994 when he became vice president and general manager of branded marketing for the former Ashland Petroleum Company. After revitalizing these operations, O'Brien was named vice president of Ashland Inc. and president of Valvoline, where he successfully redirected the motor oil marketing company and created a highly successful business team focused on a master brand strategy. O'Brien was named a senior vice president of Ashland in 1997 and joined its executive committee in 2001. Earlier this year, he relinquished his post at Valvoline to become group operating officer of the corporation with responsibility for Ashland Specialty Chemical and Ashland Distribution Company.

A native of Circleville, Ohio, O'Brien is a graduate of The Ohio State University where he earned a bachelor's degree in accounting and finance and a master's degree in business administration and where he serves on the Dean's Advisory Council for the Fisher Graduate School of Business. He is a member of the American Chemistry Council and is a member of the advisory board of Fifth Third Bank of Lexington, KY. A 1994 graduate of Leadership Kentucky, O'Brien is chairman of the board of trustees for Midway College in Kentucky and a member of the Association of Governing Boards of Universities and Colleges. He serves on the National Board of Directors of Big Brothers Big Sisters of America and is a volunteer "big brother"with Big Brothers/Big Sisters of the Bluegrass.

Ashland Inc. (NYSE:ASH) is a Fortune 225 company providing products, services and customer solutions throughout the world. Our businesses include road construction, lubricants and car-care products, specialty chemicals, chemical and plastics distribution and transportation fuels. Our products and services are fundamental to how people live and work.

-*-     -*-     -*-