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Ashland Jumps on Announcement of $450M Accelerated Share Buyback Program

Ashland Global Holdings, Inc. (ASH) announced an uncollared accelerated share repurchase (ASR) agreement with JPMorgan Chase Bank, National Association, to buy back an aggregate of $450 million worth of Ashland common shares with an initial delivery of around 3.9 million shares. Shares jumped 2.3% on the news, closing at $93.93 on September 3.

The buyback program is subject to a $1 billion share repurchase program authorized by the company’s Board on March 15, 2018, from which $800 million remains outstanding. (See Ashland Global stock charts on TipRanks)

Commenting on the program, Guillermo Novo, Chairman and CEO of the company, said, “Today’s announcement reflects the board of directors’ confidence and commitment to deliver shareholder value through disciplined capital allocation… Ashland’s strong balance sheet, compelling free cash flow generation, and net proceeds from a performance adhesives sale affords substantial investment in our key business strategies and growth initiatives as well as the ability to return capital to shareholders.”

The ASR has a deadline of March 31, 2022, but could be terminated early under certain circumstances. Additionally, JPMorgan Chase Bank, National Association may be required to deliver additional common shares to ASH, or under exceptional situations, ASH may be required to deliver common shares or make a cash payment, at its election.

In response to Ashland’s announcement of the sale of its performance adhesives business to Arkema for $1.65 billion, Deutsche Bank analyst David Begleiter lifted the price target to $115 (22.4% upside potential) from $100 while maintaining a Buy rating on the stock.

Begleiter views Ashland’s sale as a “solid positive,” with the sale price exceeding his own estimate of $1.365 billion. Also, he states that the sale completes the company’s transformation to a “(nearly) pureplay additives and ingredients company.”

Overall, the stock commands a Strong Buy consensus rating based on 4 Buys and 1 Hold. The average Ashland Global price target of $104.60 implies 11.4% upside potential to current levels. Shares have gained 28% over the past year.

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