UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): April 27, 2005
ASHLAND INC.
(Exact name of registrant as specified in its charter)
Kentucky
(State or other jurisdiction of incorporation)
1-2918 61-0122250
(Commission File Number) (I.R.S. Employer
Identification No.)
50 E. RiverCenter Boulevard, Covington, Kentucky 41012-0391
(Address of principal executive offices) (Zip Code)
P.O. Box 391, Covington, Kentucky 41012-0391
(Mailing Address) (Zip Code)
Registrant's telephone number, including area code (859) 815-3333
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
[X ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 2230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
-1-
Item 1.01 Entry into a Material Definitive Agreement
On April 27, 2005, Ashland Inc. ("Ashland") signed an amendment to
its agreement to transfer its 38-percent interest in Marathon Ashland
Petroleum LLC ("MAP") and two other businesses to Marathon Oil Corporation
("Marathon"). 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-ow ned businesses will reduce Ashland's tax basis.
Ashland 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
Ashland's current estimate of it's tax basis, Ashland expects that it 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.
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 IRS 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.
The foregoing description of the transaction is qualified in its
entirety by reference to the terms of the agreements which are filed as
Exhibits to this Form 8-K and are incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired
None.
(b) Pro Forma Financial Information
None.
(c) Exhibits
2.1* Amendment No. 1 dated as of April 27, 2005 to the Master Agreement
dated as of March 18, 2004 among Ashland Inc., ATB Holdings, Inc.,
EXM LLC, , New EXM Inc., Marathon Oil Corporation, Marathon Domestic
LLC and Marathon Ashland Petroleum LLC.
2.2* Amended and Restated Tax Matters Agreement dated as of April 27,
2005, among Ashland Inc., ATB Holdings Inc., EXM LLC, New EXM Inc.,
Marathon Oil Corporation, Marathon Oil Company, Marathon Domestic LLC
and Marathon Ashland Petroleum LLC.
2.3* Amendment No. 3 dated as of April 27, 2005 to the Amended and
Restated Limited Liability Company Agreement dated as of December 31,
1998 of Marathon Ashland Petroleum LLC, by and between Ashland Inc.
and Marathon Oil Company, a wholly owned subsidiary of Marathon Oil
Corporation.
*Ashland agrees to furnish supplementally a copy of any omitted schedule to
the United States Securities and Exchange Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
ASHLAND INC.
--------------------------------------------
(Registrant)
Date: May 2, 2005 /s/ J. Marvin Quin
--------------------------------------------
Name: J. Marvin Quin
Title: Senior Vice President,
Chief Financial Officer
EXHIBIT INDEX
2.1* Amendment No. 1 dated as of April 27, 2005 to the Master Agreement
dated as of March 18, 2004 among Ashland Inc., ATB Holdings, Inc.,
EXM LLC, , New EXM Inc., Marathon Oil Corporation, Marathon Domestic
LLC and Marathon Ashland Petroleum LLC.
2.2* Amended and Restated Tax Matters Agreement dated as of April 27,
2005, among Ashland Inc., ATB Holdings Inc., EXM LLC, New EXM Inc.,
Marathon Oil Corporation, Marathon Oil Company, Marathon Domestic LLC
and Marathon Ashland Petroleum LLC.
2.3* Amendment No. 3 dated as of April 27, 2005 to the Amended and
Restated Limited Liability Company Agreement dated as of December 31,
1998 of Marathon Ashland Petroleum LLC, by and between Ashland Inc.
and Marathon Oil Company, a wholly owned subsidiary of Marathon Oil
Corporation.
*Ashland agrees to furnish supplementally a copy of any omitted schedule to
the United States Securities and Exchange Commission upon request.