Filed by Ashland Inc. pursuant to Rules 165 and 425 promulgated
under the Securities Act of 1933, as amended, and deemed
filed pursuant to Rule 14a-12 promulgated under the
Securities Exchange Act of 1934, as amended.
Subject Company: Ashland Inc.
Commission File No.: 001-02918
Forward-Looking Statements
and Additional Information
This presentation 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 presentation to reflect events or circumstances after the
date of this presentation.
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 following information by reading the proxy statement/
prospectus when it becomes available.
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Presentation Agenda
Overview of Transaction
J. Marvin Quin
Sr. Vice President and Chief Financial Officer
Ashland’s Vision and Strategy
James J. O’Brien
Chairman and Chief Executive Officer
Q&A
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HoldCo
Overview of the Transaction
Transportation
Construction (APAC)
Chemicals:
Distribution
Specialty Chemical
(less Maleic
Anhydride)
Valvoline (less 61
VIOC Stores)
38% of MAP
61 VIOC Stores
Maleic Anhydride
New Ashland
Marathon
$315MM of
MRO Stock
Transfer of
$2.7B of Cash
and Accounts
Receivable
Ashland
Shareholders
4
Final Configuration
Transportation Construction
(APAC)
Chemicals:
Distribution
Specialty Chemical (less Maleic
Anhydride)
Valvoline (less 61 VIOC Stores)
$2.7 billion less cost of debt
and other financing
redemptions
New Ashland Stock
$315MM of Marathon stock
Approximately $4.50 per
share
Marathon Stock
Ashland
Shareholders
5
Conditions to Closing
Favorable IRS ruling
Opinions of outside tax counsel
Approval of shareholders
Regulatory approval (HSR)
Consents of 90 % of public debt
Updated solvency opinions, etc.
6
Estimated New Ashland tax basis of approximately $3.6
billion, or $51 per New Ashland share, based on number of
shares currently outstanding.
Equates to roughly $55.50 per current Ashland share
New Ashland Tax Basis
Plus Marathon Stock
Implied Old Ashland Value
Section 355(e) tax payable on difference between value of
Ashland at closing and $55.50.
Based on number of Ashland shares currently outstanding.
Section 355(e) Tax Risk
Dollars/Share
$ 51.00
4.50
$ 55.50
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Impact on Future Earnings
Revenues would be affected only by the reduction in sales from
the Maleic business and Valvoline stores, which totaled about
$83 million in 2003.
Future operating income would not have the earnings from:
MAP interest, which equaled $285 million in 2003;
Two other businesses, which totaled $16 million in 2003.
Certain costs retained post-closing
Pension/other post-retirement benefits
Environmental costs
Reduced rent costs
Net interest income
Capital structure to evolve over time
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Commercial Relationships
MAP is current Ashland supplier
Lube stocks to Valvoline
Asphalt to APAC
Solvents to Ashland Distribution
MAP is current Ashland customer
Packaged products from Valvoline
Water treatment chemicals from Specialty Chemical
If the transaction closes, MAP also becomes
Sole supplier of maleic anhydride
Largest VIOC franchisee
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COMMENTS
STATUS
STATED OBJECTIVE
Expand in existing or adjacent markets
Capture value from MAP
Reduce debt
Strategic review of businesses to
optimize business mix
Improve organizational effectiveness
Increase returns from APAC
Improve returns from Ashland
Distribution or seek strategic alternatives
Reduce G&A by $25 million
Focus on organic growth;
disciplined M&A approach
In
progress
Announced transaction with
Marathon
Total debt reduced by
$233MM since 2002
Divested Electronic Chemicals
business
Implemented Process-
centered approach
Net construction job revenues
up 20% in 1st quarter of 2004
Operating income up 44% in
the 1st quarter of 2004
Run rate of $100MM savings
by end of fiscal 2004
Profitability Improvement Plan
October 2002
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Business Update
Chemicals
Anticipated 2nd quarter operating
income in range of $50-55 million,
compared to $30 million in 2003.
Growth Strategy
Expand Core Businesses
Operational Excellence
Provide more Value-Added
Services
Expand Geographically
Transportation
Construction
Improved results expected for
historically-weakest season. Operating
loss in the range of $30-40 million for
March quarter is much improved over
$57 million loss in 2003.
Growth Strategy
Expand Core Businesses
Improve Project Development
Capabilities
Expand Major Project Group
Expand Geographically
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Use of Transaction Proceeds
Repayment of debt, build liquidity
No extraordinary dividends or stock repurchase
plans
No change in standards for acquisitions or
capital expenditures
Focus on core expansions and adjacencies
Acquisition bias toward small- to medium-sized
transactions
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Questions?