Ashland buying International Specialty Products for $3.2 billion

Specialty chemicals maker Ashland Inc. has struck a deal to buy privately held International Specialty Products Inc. for $3.2 billion as part of a plan to bolster its already strong roster of products for the skin care, drug and energy sectors.

Ashland, best known for its Valvoline oil brand, also makes chemicals and materials for the packaging and water purification industries.

In buying International Specialty Products, Ashland is betting that consumer demand for pharmaceuticals, skin creams, hair gels and cosmetics will only continue to grow.

“We looked at several companies in the past couple of years, and the one that kind of rose to the top was ISP,” Ashland Chief Executive James O’Brien said. “What we like about ISP is that they have very strong technology and patent protection. It was the fit that we wanted.”

The deal is a major windfall for the family of Samuel Heyman, a hedge fund manager who spun off Wayne, N.J.-based ISP from roofing manufacturer GAF Materials Corp. in the 1990s. Heyman died in 2009.

Valvoline, while not technically a specialty chemical product, remains crucial to Ashland, O’Brien said.

Rumors have circulated for months that Ashland may try to shed the Valvoline brand to focus solely on specialty chemicals.

“Valvoline is not for sale,” O’Brien said. “It really fits well from a financial standpoint.”

The deal’s announcement marks a major return to duty for O’Brien, who took several months off to recover from colon surgery.

“I’m feeling much, much better,” O’Brien said Tuesday. “I’m back almost 100%.”

Ashland plans to continue to market ISP products with their current brand names.

Covington, Ky.-based Ashland bought rival specialty chemicals maker Hercules in 2008 for $2.5 billion.