Ashland: Activist pressure prompts M&A rumors

NYSE:ASH - Ashland Inc.

Investment Summary

has attracted the attention of activist investors Ancora Holdings and Cruiser Capital Advisors.

Following years of portfolio restructuring and divestitures, Ashland has repositioned itself around higher-value end markets including pharmaceuticals, personal care, and specialty additives.

However, despite improving the quality of its portfolio, the company has struggled to generate consistent shareholder returns, leading investors to question whether Ashland can create more value as a standalone public company or through a strategic transaction.

The investment thesis centers on a disconnect between the underlying quality of Ashland’s assets and the company’s recent financial performance.

Its Life Sciences and Personal Care businesses benefit from favorable long-term trends including healthcare spending growth, aging populations, and demand for premium consumer products. Management has argued that these businesses provide a more defensive earnings profile, while the company’s industrial-facing segments remain positioned for recovery as cyclical markets improve.

However, Ashland’s financial results have remained challenging, with revenue falling for three consecutive years and free cash flow falling sharply in fiscal 2025 following weaker sales and operational challenges.

This disconnect has become the central focus of two activist campaigns. Ancora Holdings and Cruiser Capital Advisors argue that Ashland lacks the scale necessary to maximize shareholder value and have called on the board to pursue strategic alternatives, including a potential sale of the company.

Ancora has estimated that a transaction could value Ashland at approximately $76 per share, significantly above recent trading levels.

Business Overview

With a $2.93 billion market cap[1], Ashland is an additives and specialty ingredients company with a presence in a wide range of consumer and industrial markets including pharmaceuticals, personal care, food and beverage, architectural coatings, construction, and energy.

Founded in 1924 as Ashland Oil & Refining Company, the company employed around 2,900 people at the end of fiscal 2025[2]. Over the past decade, Ashland has undergone a significant transformation, divesting non-core businesses and repositioning itself as a focused specialty ingredients provider serving higher-margin and less cyclical markets.

Today, the company operates through four reportable segments, including: Life Sciences, which includes ingredients used in pharmaceutical, nutrition, and agricultural applications; Personal Care, consisting of preservatives and specialty ingredients used in skin care, hair care, and household products; Specialty Additives, which holds performance additives serving construction, coatings, energy, automotive, and industrial markets; and Intermediates, which includes solvents used in pharmaceuticals, electronics, and agricultural products.

Portfolio optimization has remained a central component of management's strategy. The company's most recent divestiture was the March 2025 sale of its Avoca business to French fragrance and flavor producer MANE, continuing a multi-year effort to simplify operations and concentrate resources on higher-growth specialty ingredients businesses.

Despite these efforts, Ashland has struggled to translate its strategic transformation into shareholder returns.

In June 2026, the company became the target of two separate activist investor campaigns. Ancora Holdings urged the board to evaluate strategic alternatives including a potential sale of the company, arguing that CEO Guillermo Novo's efforts to streamline the business and improve operations have failed to receive appropriate recognition from public markets.

Citing a near-20% decline in Ashland's share price during Novo's tenure, Ancora estimated that a sale could generate value of approximately $76 per share and threatened to pursue a proxy contest if the board failed to act.

One week later, Cruiser Capital Advisors launched a similar campaign, contending that Ashland lacks the scale necessary to maximize the value of its portfolio and calling on the board to initiate a strategic review process. Cruiser likewise indicated it would consider a board challenge if a credible sale process is not underway before the company's nomination window opens in September.

Together, the campaigns have shifted investor attention away from Ashland’s ongoing transformation and replaced it with questions over whether the company could generate greater value through a sale or breakup.

Industry & Competitive Position

The global specialty chemicals market was valued at around $1 trillion at the end of 2025 and is expected to surpass $1.5 trillion in 2033, according to a report from Grand View Research[3], supported by rising demand for eco-friendly and high-performance products in the wake of strict government regulations pushing companies to reduce their environmental impact.

“Emerging markets… [also] offer strong growth opportunities,” the report said. “Rapid industrialization, urban development, and rising consumer demand are increasing the need for specialty chemicals across sectors such as construction, agriculture, and manufacturing.”

Ashland’s life sciences and personal care divisions serve attractive end markets that benefit from favorable long-term trends including rising healthcare spending, aging populations, and increasing consumer demand for premium personal care products.

Management has repeatedly highlighted the defensive nature of these businesses.

For example, during Ashland's second-quarter 2026 earnings call[4], CEO Guillermo Novo told investors that life sciences had delivered "steady results supported by resilient pharma demand" while personal care generated "broad-based portfolio growth driven by strong volume gains.”

He also noted that "demand conditions [were] generally stable across the portfolio," arguing that margin pressure during the quarter was driven primarily by operational issues rather than weakness in underlying end markets.

However, conditions remain more challenging in the company's industrial-facing operations. Novo described the specialty additives segment as operating in a "mixed market environment," with improving architectural coatings demand offset by continued weakness in construction markets.

The segment has also faced pressure from slower industrial activity in China and fluctuating energy-related demand, highlighting the cyclical risks that remain embedded within portions of Ashland's portfolio.

Novo argued that both specialty additives and intermediates remain "stable at trough levels" with any recovery in coatings expected to be "gradual and regionally uneven."

Ashland competes with a broad range of chemical makers, including larger diversified producers such as Air Products and Chemicals, BASF, and Dow, as well as smaller peers such as Minerals Technologies, Huntsman, and FMC.

While these companies differ significantly in scale and end-market exposure, all compete for customers across various specialty materials, additives, ingredients, and performance chemical applications.

Ashland's relatively small size compared to many of its competitors has become a focal point of the activist investment thesis, with both Ancora and Cruiser Capital arguing that the company lacks the scale necessary to maximize the value of its portfolio as a standalone public company.

Financial Performance

Ashland's financial performance has deteriorated in recent years, raising questions about the effectiveness of management's transformation strategy.

The company generated $1.82 billion in sales in fiscal 2025, down considerably from $2.11 billion the year before[2]. This continues the company's three-year decline in sales since reaching a peak of $2.39 billion in 2022[5], representing a cumulative decrease of 23.85%.

The company's peer group tells a similar story. Minerals Technologies performed the best, with net sales declining just 2.48% between 2022 and 2025[6][7]. However, Dow and Huntsman recorded more significant revenue decreases of 29.76%[8][9] and 29.17%[10][11], respectively, reflecting greater exposure to industrial and commodity chemical markets.

While weakening sales have pressured results across the sector, Ashland's earnings performance has been particularly volatile. Diluted earnings per share (EPS) fell to negative $18.23 in fiscal 2025, compared to $3.36 in 2024 and $3.31 in 2023[2].

Furthermore, total operating costs and expenses reached $2.6 billion in fiscal 2025, exceeding the company's $1.82 billion in sales and resulting in a $775 million operating loss[2].

However, reported results were significantly impacted by a $706 million goodwill impairment charge and $161 million of acquisition and divestiture-related losses. Excluding these items, Ashland's underlying expense base was approximately $1.73 billion, representing 94.84% of sales. By comparison, adjusted operating expenses represented 96.07% of sales in 2024 and 92.74% in 2023[2].

Peer company Minerals Technologies reported a comparable expense ratio, with total operating costs and expenses representing 97.71% of sales in 2025[6]. Dow and Huntsman, meanwhile, reported costs that exceeded revenue, at 103.65%[8] and 102.31%[10] of sales, respectively.

These figures suggest that while Ashland's profitability has weakened, the company continues to maintain a cost structure that compares favorably with several larger industry peers.

The more concerning trend for investors is cash generation.

Free cash flow declined sharply to $36 million in fiscal 2025 from $325 million the year before[2]. The deterioration occurred despite years of portfolio optimization and restructuring initiatives intended to improve operational efficiency and shareholder returns.

With revenue continuing to decline and the company's underlying expense base remaining relatively stable, Ashland appears to have struggled to convert sales into sustainable cash generation.

The weakening cash flow profile is particularly relevant given Ancora and Cruiser Capital’s hypotheses that Ashland’s portfolio is undervalued by the market. However, declining revenue, weak earnings, and a significant reduction in free cash flow may help explain why investors have been reluctant to assign the company a higher valuation despite its exposure to attractive end markets.

From a balance sheet perspective, Ashland remains reasonably capitalized, although leverage exceeds that of several peers.

Long-term debt increased slightly to $1.38 billion in 2025 from $1.35 billion the year before[2], continuing an upward trend from $1.27 billion in 2022[5].

The company's 12-month average financial leverage ratio of 2.93[2][12][13][14] sits above those reported by Minerals Technologies (2.03)[6][15][16][17], Dow (1.86)[8][18][19][20], and Huntsman (1.34)[10][21][22][23].

Liquidity remains adequate. With $343 million of excess cash at the end of fiscal second quarter 2026[12], Ashland's excess cash to market cap ratios stood at 7.34%. This compares with 13.33%[15] for Minerals Technologies and 18.80%[18], for Dow, suggesting the company has less balance sheet flexibility than some peers.

Ashland has nevertheless continued to return capital to shareholders, albeit in at a limited pace. While no shares were repurchased during the second quarter of fiscal 2026, the company repurchased $100 million of stock during fiscal 2025[12] and had approximately $520 million remaining under its existing authorization at quarter-end.

Valuation & Stock Performance

Ashland’s one-year total shareholder returns (TSR) was 0.32%, while its three-year TSR was negative 0.16%[24][25].

The company’s performance was broadly consistent with several chemical industry peers, reflecting the broader challenges facing the sector.

Minerals Technologies generated a 12-month TSR of 0.44% and a three-year TSR of 0.47%[26][27], while Dow[28][29] and Huntsman[30][31] generated one-year TSRs of 0.12% and 0.14%, respectively, and three-year TSRs of negative 0.29% and negative 0.45%, respectively.

However, Ashland’s longer-term stock performance reflects a broader loss of investor confidence following years of portfolio restructuring and declining financial performance.

Since reaching a multi-year high of $111.87 in late 2022, Ashland’s share price has declined around 43% as investors have focused on continued revenue declines, weak free cash flow generation, and operational challenges in several business segments.

The underperformance is notable, with activist Ancora pointing to a 17% share price decline since Guillermo Novo became CEO in December 2019.

Ashland’s valuation multiples present a mixed picture relative to peers.

The company’s 12-month price-to-cash flow ratio of 10.98[24] is above Minerals Technologies at 8.27[26], Dow at 9.38[28], and Huntsman at 9.50[30].

While Ashland’s premium valuation indicates that investors continue to recognize the quality of its specialty ingredients portfolio, it also highlights the disconnect between the company’s strategic positioning and recent financial performance.

This disconnect lies at the heart of the activist investment thesis. Ancora's estimated $76-per-share valuation implies that a strategic acquirer could realize value that public markets have yet to recognize, while critics argue that sustained operational improvement is required before such a valuation can be justified.

Despite trading at a higher cash flow multiple than peers, Ashland’s free cash flow declined sharply in fiscal 2025, raising questions over whether management has been able to fully capture the value of its transformed portfolio.

A similar pattern is visible in price-to-sales valuation. Ashland’s 12-month price-to-sales ratio of 1.62[24] exceeds Minerals Technologies at 1.15[26], Dow at 0.53[27], and Huntsman at 0.34[30].

Corporate Governance

Ashland’s board currently consists of nine directors with an average age of 63.5 years[32].

The company’s corporate governance guidelines[33] require that at least two-thirds of directors be independent, while all standing board committees are composed entirely of independent directors.

However, the company does not require an independent chair or the separation of the roles of CEO and chair, instead leaving the board discretion to determine the most appropriate leadership structure[34].

Novo has served as chairman since May 2019, taking up the mantle of CEO in December that same year. Prior to joining Ashland, he held senior leadership positions at peers Minerals Technologies, Air Products and Chemicals, and Dow, and currently serves on the board of specialty materials maker PPG Industries.

As both chair and CEO, Novo combines responsibility for the company's strategic direction with oversight of management, supported by the board's lead independent director Susan Main.

The board operates under a declassified structure, with all directors standing for election annually[34]. This is generally viewed as enhancing board accountability by providing shareholders with regular opportunities to influence board composition.

Shareholder support for the board has remained consistently strong, with average support for director reelections increasing from 97.4% in 2025[36] to 98.5% in 2026[35].

Every director received more than 96% support in 2026, while Novo’s reelection was approved by 97.9% of votes cast, suggesting that shareholders have continued to express confidence in the board despite the company’s recent financial underperformance and the emergence of two activist campaigns.

Shareholder Rights & Ownership

Ashland’s shareholder base is dominated by large institutional investors, with the top five institutions collectively controlling more than a third of outstanding shares.

This level of concentration gives a relatively small group of institutional investors significant influence over board elections, executive compensation, and any future proxy contest. Should Ancora or Cruiser seek board representation, support from these institutions would likely determine the outcome.

In contrast, insider ownership remains below 1%, indicating that management has limited direct economic exposure to equity performance.

While this is not necessarily unusual, it places greater emphasis on the board’s incentive structures and shareholder oversight to ensure management’s interests remain aligned with long-term value creation.

Beyond ownership, Ashland provides shareholders with several governance rights that facilitate board accountability, although some are subject to relatively high ownership thresholds.

Ashland’s bylaws provide shareholders with proxy access, allowing eligible investors to nominate directors for inclusion in the company’s proxy materials. However, the nominating shareholders must deliver their notice between 90 and 120 days prior to the first anniversary of the immediately preceding annual meeting[34].

Furthermore, shareholders can only nominate either two directors, or 20% of the total number of directors currently in office. Nominating shareholders – of a maximum group size of 20 stockholders - must also have owned at least a 3% of the outstanding stock continuously for at least three years[34].

Ashland’s 2026 annual meeting passed on January 20, however shareholders can nominate directors for consideration at the 2027 annual meeting between September 22, 2026 and October 22, 2026[32].

Shareholders owning at least 33% of the company’s outstanding shares may also call a special meeting[34].

While the provision gives investors a mechanism to act between annual meetings, the ownership threshold is considerably higher than the 10% threshold favored by many institutional investors and corporate governance advocates.

Companies, however, often argue that higher thresholds reduce the risk of frequent or disruptive special meeting requests.

Overall, Ashland's governance framework provides shareholders with meaningful rights through annual director elections and proxy access, but the relatively high threshold required to call a special meeting limits investors' ability to act outside the annual meeting cycle.

Given the company's concentrated institutional ownership, any successful activist campaign is therefore likely to depend less on the formal governance framework than on persuading a relatively small group of large shareholders that strategic change is warranted.

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References

[1] On June 24, 2026, Financial Times (https://markets.ft.com/) listed the market capitalization for Ashland Inc. (ASH) stock as $2.93 billion.

[2] “Ashland Inc. fiscal 2025 Annual Report” (HTM). November 11, 2025. Retrieved June 24, 2026.

[3] “Specialty Chemicals Market 2026-2033” www.grandviewresearch.com. June 2026. Retrieved June 24, 2026.

[4] “Ashland Q2 2026 Earnings Call Transcript” www.fool.com. April 29, 2026. Retrieved June 24, 2026.

[5] “Ashland Inc. fiscal 2022 Annual Report” (HTM). November 21, 2022. Retrieved June 24, 2026.

[6] “Minerals Technologies 2025 Annual Report” (HTM). February 20, 2026. Retrieved June 24, 2026.

[7] “Minerals Technologies 2022 Annual Report” (HTM). February 17, 2023. Retrieved June 24, 2026.

[8] “Dow 2025 Annual Report” (HTM). February 3, 2026. Retrieved June 24, 2026.

[9] “Dow 2022 Annual Report” (HTM). February 1, 2023. Retrieved June 24, 2026.

[10] “Huntsman 2025 Annual Report” (HTM). February 18, 2026. Retrieved June 24, 2026.

[11] “Huntsman 2022 Annual Report” (HTM). February 21, 2023. Retrieved June 24, 2026.

[12] “Ashland fiscal Q2 2026 Quarterly Report” (HTM). April 29, 2026. Retrieved June 24, 2026.

[13] “Ashland fiscal Q1 2026 Quarterly Report” (HTM). February 3, 2026. Retrieved June 24, 2026.

[14] “Ashland fiscal Q3 2025 Quarterly Report” (HTM). July 30, 2025. Retrieved June 24, 2026.

[15] “Minerals Technologies Q1 2026 Quarterly Report” (HTM). May 1, 2026. Retrieved June 24, 2026.

[16] “Minerals Technologies Q3 2025 Quarterly Report” (HTM). October 24, 2025. Retrieved June 24, 2026.

[17] “Minerals Technologies Q2 2025 Quarterly Report” (HTM). July 25, 2025. Retrieved June 24, 2026.

[18] “Dow Q1 2026 Quarterly Report” (HTM). April 24, 2026. Retrieved June 24, 2026.

[19] “Dow Q3 2025 Quarterly Report” (HTM). October 24, 2025. Retrieved June 24, 2026.

[20] “Dow Q2 2025 Quarterly Report” (HTM). July 25, 2025. Retrieved June 24, 2026.

[21] “Huntsman Q1 2026 Quarterly Report” (HTM). May 1, 2026. Retrieved June 24, 2026.

[22] “Huntsman Q3 2025 Quarterly Report” (HTM). November 7, 2025. Retrieved June 24, 2026.

[23] “Huntsman Q2 2025 Quarterly Report” (HTM). August 1, 2025. Retrieved June 24, 2026.

[24] “ASH - Ashland Inc. Chart | Morningstar” www.morningstar.com. June 24, 2026. Retrieved June 24, 2026.

[25] “Dividend History | Ashland Inc.” www.investor-ashland.com. May 5, 2026. Retrieved June 24, 2026.

[26] “MTX - Minerals Technologies | Morningstar” www.morningstar.com. June 24, 2026. Retrieved June 24, 2026.

[27] “Minerals Technologies (MTX) Dividend History” www.stockanalysis.com. June 24, 2026. Retrieved June 24, 2026.

[28] “DOW - Dow Inc. Chart | Morningstar” www.morningstar.com. June 24, 2026. Retrieved June 24, 2026.

[29] “Dow Inc. (DOW) Dividend History” www.stockanalysis.com. June 24, 2026. Retrieved June 24, 2026.

[30] “HUN - Huntsman Corp Chart | Morningstar” www.morningstar.com. June 24, 2026. Retrieved June 24, 2026.

[31] “Dividends :: Huntsman Corporation (HUN)” www.huntsman.com. April 29, 2026. Retrieved June 24, 2026.

[32] “Ashland Inc. 2026 Proxy Statement” (HTM). December 9, 2025. Retrieved June 24, 2026.

[33] “Corporate Governance Guidelines” www.investor.ashland.com. January 17, 2025. Retrieved June 24, 2026.

[34] “By-Laws of Ashland Inc.” (HTM). September 20, 2022. Retrieved June 24, 2026.

[35] “Ashland Inc. 2026 Annual Meeting Results” (HTM). January 22, 2026. Retrieved June 24, 2026.

[36] “Ashland Inc. 2025 Annual Meeting Results” (HTM). January 22, 2025. Retrieved June 24, 2026.