RISK FACTORS

Investing in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information in this prospectus, including our financial statements and the related notes included elsewhere in this prospectus, before deciding whether to invest in shares of our common stock. We describe below what we believe are currently the material risks and uncertainties we face, but they are not the only risks and uncertainties we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business. If any of the following risks actually occur, our business, financial condition, results of operations and future prospects could be materially and adversely affected. In that event, the market price of our common stock could decline and you could lose part or all of your investment.

Risks Related to Our Business

Damage to our brand and reputation could have an adverse effect on our business.

Maintaining our strong reputation with both consumers and customers is a key component of our business. Product or service complaints or recalls, our inability to ship, sell or transport affected products and governmental investigations may harm our reputation with consumers and customers, which may materially and adversely affect our business operations, decrease sales and increase costs.

We manufacture and market a variety of products, such as automotive and industrial lubricants and antifreeze, and provide automotive maintenance services. If allegations are made that some of our products have failed to perform up to consumers’ or customers’ expectations or have caused damage or injury to individuals or property, or that our services were not provided in a manner consistent with our vision and values, the public may develop a negative perception of our brands. In addition, if our franchisees or Express Care operators do not successfully operate their quick lube service centers in a manner consistent with our standards, our brand, image and reputation could be harmed, which in turn could negatively impact our business and operating results. A negative public perception of our brands, whether justified or not, could impair our reputation, involve us in litigation, damage our brand equity and have a material adverse effect on our business. In addition, damage to the reputation of our competitors or others in our industry could negatively impact our reputation and business.

We have set aggressive growth goals for our business, including increasing sales, cash flow, market share and margins, in order to achieve our long-term strategic objectives. Execution of our growth strategies and business plans to facilitate that growth involves a number of risks.

We have set aggressive growth goals for our business in order to meet our long-term strategic objectives and improve shareholder value. Our failure to meet one or more of these goals or objectives would negatively impact our business and is one of the most important risks that we face. Aspects of that risk include, among others, changes to the economic environment, changes to the competitive landscape, including those related to automotive maintenance recommendations and consumer preferences, attraction and retention of skilled employees, the potential failure of product innovation plans, failure to comply with existing or new regulatory schemes, failure to maintain a competitive cost structure and other risks outlined in greater detail in this “Risk Factors” section.

Demand for our products and services could be adversely affected by consumer spending trends, declining economic conditions, trends in our industry and a number of other factors, all of which are beyond our control.

Demand for our products and services may be affected by a number of factors we cannot control, including the number and age of vehicles in current service, regulation and legislation, technological advances in the automotive industry and changes in engine technology, including the adoption rate of electric or other alternative engine technologies. In addition, during periods of declining economic conditions, consumers may defer vehicle maintenance. Similarly, increases in energy prices may cause miles driven to decline, resulting in less wear and tear

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and lower demand for maintenance, which may lead to consumers deferring purchases of our products and services. All of these factors, which impact metrics such as drain intervals and oil changes per day, could result in a decline in the demand for our products and services and adversely affect our sales, cash flows and overall financial condition. Between 2007 and 2012, U.S. passenger car motor oil volumes declined. This decline in demand is a result of, among other factors, changing automotive OEM specifications and longer recommended intervals between oil changes. Over the past two years, however, market volume has increased, largely due to the increase in the number of cars on the road and miles driven.

The success of our growth initiatives depends on our ability to successfully develop and implement one or more integrated digital platforms that will help us better understand consumers and more effectively engage them.

We are in the process of designing and implementing a number of digital platforms that will integrate our operations with customer and consumer data. The successful development and implementation of these digital platforms will depend on our ability to identify an appropriate strategy, dedicate adequate resources and select technologies that will provide us with adequate flexibility to adapt to future developments in the marketplace and changes in consumer and customer behavior. We have incurred and expect to incur significant upfront investments to develop these digital platforms. There is a risk that once implemented, these digital platforms will not deliver all or part of the expected benefits, including additional sales. As we develop and implement our digital platforms, we may elect to modify, replace or abandon certain technology initiatives, which could result in write-downs.

Our success depends upon our ability to attract and retain key employees and the identification and development of talent to succeed senior management.

Our success depends on our ability to attract and retain key personnel, and we rely heavily on our senior management team. The inability to recruit and retain key personnel or the unexpected loss of key personnel may adversely affect our operations. This risk of unwanted employee turnover is substantial in positions that require certain technical expertise. This risk is also substantial in developing international markets we have targeted for growth and in North America, where attracting marketing and technical expertise to geographies necessary to support our management is important to our success. This risk is further enhanced by the planned separation from Ashland. In addition, because of our reliance on our senior management team, our future success depends, in part, on our ability to identify and develop or recruit talent to succeed our senior management and other key positions throughout the organization. If we fail to identify and develop or recruit successors, we are at risk of being harmed by the departures of these key employees.

We face significant competition from other companies, which places downward pressure on prices and margins and may adversely affect our business and results of operations.

We operate in highly competitive markets, competing against a number of domestic and foreign companies. Competition is based on several key criteria, including brand recognition, product performance and quality, product price, product availability and security of supply, ability to develop products in cooperation with customers and customer service, as well as the ability to bring innovative products or services to the marketplace. Certain key competitors, including Shell/Pennzoil and Jiffy Lube, BP/Castrol and Exxon/Mobil, are significantly larger than us and have greater financial resources and more diverse portfolios of products and services, leading to greater operating and financial flexibility. As a result, these competitors may be better able to withstand adverse changes in conditions within the relevant industry, the prices of raw materials and energy or general economic conditions. In addition, competitors’ pricing decisions could compel us to decrease our prices, which could negatively affect our margins and profitability. Additional competition in markets served by us could adversely affect margins and profitability and could lead to a reduction in market share. Also, we compete in certain markets that are declining, such as the U.S. passenger car motor oil market. If our strategies for dealing with declining markets and leveraging market opportunities are not successful, our results of operations could be negatively affected.

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Because of the concentration of our sales to a small number of retailers, the loss of one or more of, or a significant reduction in orders from, our top retail customers could adversely affect our financial results, as could the loss of one of our distributor relationships.

Our Core North America segment’s sales represented approximately 54% of our total sales in fiscal 2015. Napa Auto Parts, AutoZone, Advance Auto Parts, O’Reilly Auto Parts and another large national retailer together accounted for 46% of Core North America’s fiscal 2015 sales and 45% of Core North America’s outstanding trade accounts receivable as of June 30, 2016. Napa Auto Parts accounted for greater than 10% of Core North America’s fiscal 2015 sales. Our volume of sales to these customers fluctuates and can be influenced by many factors, including product pricing, purchasing patterns and promotional activities. The loss of, or significant reduction in orders from, one of our top five retail customers or any other significant customer could have a material adverse effect on our business, financial condition, results of operations or cash flows, as could customer disputes regarding shipments, fees, merchandise condition or related matters. Our inability to collect accounts receivable from one of our major customers, or a significant deterioration in the financial condition of one of these customers, including a bankruptcy filing or a liquidation, could also have a material adverse effect on our financial condition, results of operations or cash flows. We also rely on independent distributors to sell and deliver our products. Disagreements or the loss of our relationship with a distributor could also have a material adverse effect on our financial condition, results of operations or cash flows.

Our marketing activities may not be successful.

We invest substantial resources in advertising, consumer promotions and other marketing activities in order to maintain and strengthen our brand image and product awareness. The Valvoline name and brand image are integral to the growth of our business and our expansion into new markets. Failure to adequately market and differentiate our products and services from competitive products and services could adversely affect our business. There can be no assurances that our marketing strategies will be effective or that our investments in advertising activities will result in a corresponding increase in sales of our products. If our marketing initiatives are not successful, we will have incurred significant expenses without the benefit of higher sales of our products. In addition, if any party with whom we have a sponsorship relationship were to generate adverse publicity, our brand image could be harmed.

Our business exposes us to potential product liability claims and recalls, which could adversely affect our financial condition and performance.

The development, manufacture and sale of automotive, commercial and industrial lubricants, automotive chemicals and the provision of automotive maintenance services involve an inherent risk of exposure to product liability claims, false advertising claims, product recalls, workplace exposure, product seizures and related adverse publicity. A product liability claim, false advertising claim or related judgment against us could also result in substantial and unexpected expenditures, affect consumer or customer confidence in our products, and divert management’s time and attention from other responsibilities. Although we maintain product liability insurance, there can be no assurance that the type or level of coverage we have is adequate or that we will be able to continue to maintain our existing insurance or obtain comparable insurance at a reasonable cost, if at all. A product recall or a partially or completely uninsured product liability judgment against us could have a material adverse effect on our reputation, results of operations and financial condition.

Failure to develop and market new products and production technologies could impact our competitive position and have an adverse effect on our business and results of operations.

The lubricants industry is subject to periodic technological change and ongoing product improvements. In order to maintain margins and remain competitive, we must successfully develop and introduce new products or improvements that appeal to our customers and ultimately to global consumers. Changes in additive technologies, base oil production techniques and sources, and the demand for improved performance by OEMs

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and consumers place particular pressure on us to continue to improve our product offerings. Our efforts to respond to changes in consumer demand in a timely and cost-efficient manner to drive growth could be adversely affected by difficulties or delays in product development and service innovation, including the inability to identify viable new products, successfully complete research and development, obtain regulatory approvals, obtain intellectual property protection or gain market acceptance of new products or service techniques. Due to the lengthy development process, technological challenges and intense competition, there can be no assurance that any of the products we are currently developing, or could develop in the future, will achieve substantial commercial success. The time and expense invested in product development may not result in commercial products or provide revenues. We could be required to write-off our investment in a new product that does not reach commercial viability. Moreover, we may experience operating losses after new products are introduced and commercialized because of high start-up costs, unexpected manufacturing costs or problems, or lack of demand.

The impact of changing laws or regulations or the manner of interpretation or enforcement of existing laws or regulations could adversely impact our financial performance and restrict our ability to operate our business or execute our strategies.

New laws or regulations, or changes in existing laws or regulations or the manner of their interpretation or enforcement, could increase our cost of doing business and restrict our ability to operate our business or execute our strategies. This risk includes, among other things, the possible taxation under U.S. law of certain income from foreign operations, the possible taxation under foreign laws of certain income we report in other jurisdictions, regulations related to the protection of private information of our employees and customers, regulations issued by the U.S. Federal Trade Commission (and analogous non-U.S. agencies) affecting us and our customers, compliance with the REACH regulation (and analogous non-EU initiatives). In addition, compliance with laws and regulations is complicated by our substantial and growing global footprint, which will require significant and additional resources to ensure compliance with applicable laws and regulations in the approximately 140 countries where we conduct business.

Our global operations expose us to trade and economic sanctions and other restrictions imposed by the United States, the European Union and other governments and organizations. The U.S. Departments of Justice, Commerce, State and Treasury and other federal agencies and authorities have a broad range of civil and criminal penalties they may seek to impose against corporations and individuals for violations of economic sanctions laws, export control laws, the Foreign Corrupt Practices Act (the “FCPA”) and other federal statutes and regulations, including those established by the Office of Foreign Assets Control (“OFAC”). Under these laws and regulations, as well as other anti-corruption laws, anti-money-laundering laws, export control laws, customs laws, sanctions laws and other laws governing our operations, various government agencies may require export licenses, may seek to impose modifications to business practices, including cessation of business activities in sanctioned countries or with sanctioned persons or entities and modifications to compliance programs, which may increase compliance costs, and may subject us to fines, penalties and other sanctions. A violation of these laws or regulations could adversely impact our business, results of operations and financial condition.

Although we have implemented policies and procedures in these areas, we cannot assure you that our policies and procedures are sufficient or that directors, officers, employees, representatives, distributors, consultants and agents have not engaged and will not engage in conduct for which we may be held responsible, nor can we assure you that our business partners have not engaged and will not engage in conduct that could materially affect their ability to perform their contractual obligations to us or even result in our being held liable for such conduct. Violations of the FCPA, OFAC restrictions or other export control, anti-corruption, anti-money-laundering and anti-terrorism laws or regulations may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could have a material adverse effect on our business, financial condition, cash flows and results of operations.

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Our substantial global operations subject us to risks of doing business in foreign countries, which could adversely affect our business, financial condition and results of operations.

Sales from our International business segment accounted for 26% of our sales for fiscal 2015. We expect sales from international markets to continue to represent an even larger portion of our sales in the future. Also, a significant portion of our manufacturing capacity is located outside of the United States. Accordingly, our business is subject to risks related to the differing legal, political, cultural, social and regulatory requirements and economic conditions of many jurisdictions.

The global nature of our business presents difficulties in hiring and maintaining a workforce in certain countries. Fluctuations in exchange rates may affect product demand and may adversely affect the profitability in U.S. dollars of products and services provided in foreign countries. In addition, foreign countries may impose additional withholding taxes or otherwise tax our foreign income, or adopt other restrictions on foreign trade or investment, including currency exchange controls. The imposition of tariffs is also a risk that could impair our financial performance. In addition, joint ventures, particularly our existing joint ventures with Cummins in India and China, are an important part of our growth strategy internationally. If our relationship with one of our joint venture partners were to deteriorate, it could negatively impact our ability to achieve our growth goals internationally.

Certain legal and political risks are also inherent in the operation of a company with our global scope. For example, it may be more difficult for us to enforce our agreements or collect receivables through foreign legal systems. There is a risk that foreign governments may nationalize private enterprises in certain countries where we operate. In certain countries or regions, terrorist activities and the response to such activities may threaten our operations more than in the United States. Social and cultural norms in certain countries may not support compliance with our corporate policies including those that require compliance with substantive laws and regulations. Also, changes in general economic and political conditions in countries where we operate, particularly in Europe, the Middle East and emerging markets, are a risk to our financial performance and future growth. For example, we exited our Venezuelan joint venture in 2015 due in part to the continued lack of exchangeability between the Venezuelan bolivar and U.S. dollar and other Venezuelan regulations. In addition, in executing our global growth strategies, we have entered into several important strategic relationships with joint venture partners, such as Cummins, unaffiliated distributors, toll manufacturers and others. The need to identify financially and commercially strong partners to fill these roles who will comply with the high manufacturing and legal compliance standards we require is a risk to our financial performance.

As we continue to operate our business globally, our success will depend, in part, on our ability to anticipate and effectively manage these and other related risks. There can be no assurance that the consequences of these and other factors relating to our multinational operations will not have an adverse effect on our business, financial condition or results of operations.

The competitive nature of our markets may delay or prevent us from passing increases in raw material costs on to our customers. In addition, certain of our suppliers may be unable to deliver products or raw materials or may withdraw from contractual arrangements. The occurrence of either event could adversely affect our results of operations.

Rising and volatile raw material prices, especially for base oil and lubricant additives, may negatively impact our costs, results of operations and the valuation of our inventory. We are not always able to raise prices in response to increased costs of raw materials, and our ability to pass on the costs of such price increases is dependent upon market conditions. Likewise, reductions in the valuation of our inventory due to market volatility may not be recovered and could result in losses.

We purchase certain products and raw materials from suppliers, often pursuant to written supply contracts. If those suppliers are unable to meet our orders in a timely manner or choose to terminate or otherwise avoid contractual arrangements, we may not be able to make alternative supply arrangements. For base oils, our

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suppliers are primarily large oil producers, many of whom operate oil lubricant production and sales businesses as part of their enterprise. There are risks inherent in obtaining important raw materials from actual or potential competitors, including the risk that applicable antitrust laws may be inadequate to mitigate our exposure to these risks. We purchase substantially all of our lubricant additives from the following four suppliers: Afton Chemical Corporation, Chevron Oronite Company LLC, the Infineum group of companies and Lubrizol Corporation. Because the industry is characterized by a limited number of lubricant additives suppliers, there are a limited number of alternative suppliers with whom we could transact in the event of a disruption to our existing supply relationships. The inability of our suppliers to meet our supply demands could also have a material adverse effect on our business.

Also, domestic and global government regulations related to the manufacture or transport of certain raw materials may impede our ability to obtain those raw materials on commercially reasonable terms. If we are unable to obtain and retain qualified suppliers under commercially acceptable terms, our ability to manufacture and deliver products in a timely, competitive and profitable manner or grow our business successfully could be adversely affected.

Acquisitions, strategic alliances and investments could result in operating difficulties, dilution and other harmful consequences that may adversely impact our business and results of operations.

Acquisitions, particularly for our VIOC business, and building strategic alliances for distribution and manufacturing, particularly in international markets, including through joint venture partnerships, product distribution and toll manufacturing arrangements, are important elements of our overall growth strategy. We expect to continue to evaluate and enter into discussions regarding a wide array of potential strategic transactions. These transactions and agreements could be material to our financial condition and results of operations. In addition, the process of integrating an acquired company, business, or product may create unforeseen operating difficulties or expenditures. The areas where we face risks include:

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Our failure to address these risks or other problems encountered in connection with our past or future acquisitions, investments or strategic alliances could cause us to fail to realize the anticipated benefits of such acquisitions, investments or strategic alliances, incur unanticipated liabilities and harm our business generally.

Our acquisitions, investments and strategic alliances could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities or amortization expenses, impairment of goodwill or purchased long-lived assets and restructuring charges, any of which could harm our financial condition, results of operations and cash flows. Also, the anticipated benefits of our acquisitions may not be realized. In addition, our balance sheet includes goodwill primarily related to acquisitions and future acquisitions may result in our recognition of additional goodwill. The impairment of a significant portion of this goodwill would negatively affect our financial results.

The business model for our VIOC business, including its dependence on franchised oil change centers, presents a number of risks.

VIOC is made up of a nation-wide network of both company-owned and franchised stores. Our success relies in part on the financial success and cooperation of our franchisees. However, we have limited influence over their operations. Our franchisees manage their businesses independently and are responsible for the day to day operations of approximately 68% of VIOC stores as of June 30, 2016. Our revenue and income growth from franchised stores are largely dependent on the ability of our franchisees to grow their sales. Our franchisees may have limited or no sales growth, and our revenues and margins could be negatively affected as a result. In addition, if sales or business performance trends worsen for franchisees, their financial results may deteriorate, which could result in, among other things, VIOC store closures, delayed or reduced payments to us and reduced growth in the number of VIOC stores.

Our success also depends on the willingness and ability of our independent franchisees to implement major initiatives, which may require additional investment by them, and remain aligned with us on operating, promotional and capital intensive reinvestment plans. The ability of our franchisees to contribute to the achievement of our overall plans is dependent in large part on the availability of funding to our franchisees at reasonable interest rates and may be negatively impacted by the financial markets in general or the creditworthiness of individual franchisees.

Our operating performance and reputation could also be negatively impacted if our independent franchisees experience service failures or otherwise operate in a manner that projects a brand image inconsistent with our values, particularly if our contractual and other rights and remedies are limited, costly to exercise or subject to litigation. If our franchisees do not successfully operate VIOC stores in a manner consistent with our standards, our brand, image and reputation could be harmed, which in turn could negatively impact our business and operating results.

The ownership mix of company-owned and franchised VIOC stores also affects our results and financial condition. The decision to own stores or to operate under franchise or license agreements is driven by a large number of factors with a complex and changing interrelationship. In addition, the size of our largest franchisees creates additional risk due to our dependence on their particular growth, financial and operating performance and cooperation and alignment with our initiatives.

In addition, we are the primary supplier of products to all VIOC stores. The growth and performance of our lubricants and other product lines depends in large part on the performance of our VIOC business, potentially amplifying the negative affect of the other risks related to the VIOC business model. Poor performance by VIOC stores would negatively impact revenues and income for other Valvoline reporting segments.

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Adverse developments in the global economy or in regional economies and potential disruptions of financial markets could negatively impact our customers and suppliers, and therefore have a negative impact on our results of operations.

A global or regional economic downturn may reduce customer demand or inhibit our ability to produce and sell products. Our business and operating results are sensitive to global and regional economic downturns, credit market tightness, declining consumer and business confidence, fluctuating commodity prices, volatile exchange rates, changes in interest rates, sovereign debt defaults and other challenges, including those related to international sanctions and acts of aggression or threatened aggression that can affect the global economy. With 74% of our sales coming from North America in fiscal 2015, we are particularly sensitive to the risk of an economic slowdown or downturn in that region. In the event of adverse developments or stagnation in the economy or financial markets, our customers may experience deterioration of their businesses, reduced demand for their products, cash flow shortages and difficulty obtaining financing. As a result, existing or potential customers might delay or cancel plans to purchase products and may not be able to fulfill their obligations to us in a timely fashion. Further, suppliers may experience similar conditions, which could impact their ability to fulfill their obligations to us. A weakening or reversal of the global economy or a substantial part of it could negatively impact our business, results of operations, financial condition and ability to grow.

We use information technology systems to conduct business, and these systems are at risk from cyber security threats.

The nature of our business, the markets we serve and the geographic profile of our operations make us a target of cyber security threats. Despite steps we take to mitigate or eliminate them, cyber security threats to our systems are increasing and becoming more advanced and could occur as a result of the activity of hackers, employee error or employee misconduct. A breach of our information technology systems could lead to the loss and destruction of trade secrets, confidential information, proprietary data, intellectual property, customer and supplier data and employee personal information, and could disrupt business operations which could adversely affect our relationships with business partners and harm our brands, reputation and financial results. Our customer data may include names, addresses, phone numbers, email addresses and payment account information, among other information. Depending on the nature of the customer data that is compromised, we may also have obligations to notify users, law enforcement or payment companies about the incident and may need to provide some form of remedy, such as refunds for the individuals affected by the incident. We do not currently carry insurance for breaches of our information technology systems.

We may fail to adequately protect our intellectual property rights or may be accused of infringing the intellectual property rights of third parties.

We rely heavily upon our trademarks, domain names and logos to market our brands and to build and maintain brand loyalty and recognition, as well as upon trade secrets. We also rely on a combination of laws and contractual restrictions with employees, customers, suppliers, affiliates and others, to establish and protect our various intellectual property rights. For example, we have generally registered and continue to register and renew, or secure by contract where appropriate, trademarks and service marks as they are developed and used, and reserve, register and renew domain names as appropriate. Effective trademark protection may not be available or may not be sought in every country in which our products are made available and contractual disputes may affect the use of marks governed by private contract. Similarly, not every variation of a domain name may be available or be registered, even if available.

We generally seek to apply for patents or for other similar statutory protections as and if we deem appropriate, based on then-current facts and circumstances, and will continue to do so in the future. No assurances can be given that any patent application we have filed or will file will result in a patent being issued, or that any existing or future patents will afford adequate or meaningful protection against competitors or against similar technologies. In addition, no assurances can be given that third parties will not create new products or methods that achieve similar results without infringing upon patents we own.

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Despite these measures, our intellectual property rights may still not be protected in a meaningful manner, challenges to contractual rights could arise or third parties could copy or otherwise obtain and use our intellectual property without authorization. The occurrence of any of these events could result in the erosion of our brands and limit our ability to market our brands using our various trademarks, as well as impede our ability to effectively compete against competitors with similar products and services, any of which could adversely affect our business, financial condition and results of operations.

From time to time, we have been subject to legal proceedings and claims, including claims of alleged infringement of trademarks, copyrights, patents and other intellectual property rights held by third parties. In addition, in the future, third parties may sue us for alleged infringement of their proprietary or intellectual property rights. We may not be aware of whether our products do or will infringe existing or future patents or the intellectual property rights of others. In addition, litigation may be necessary in the future to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of proprietary rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs and diversion of management and technical resources, any of which could adversely affect our business, financial condition and results of operations.

Our pension and postretirement benefit plan obligations are currently underfunded, and we may have to make significant cash payments to some or all of these plans, which would reduce the cash available for our businesses.

In connection with the separation, we will assume certain of Ashland’s historical U.S. postretirement benefit plans and qualified and non-qualified pension liabilities, including liabilities for multiemployer plans for certain employees covered by collective bargaining agreements. The funded status of our pension plans is dependent upon many factors, including returns on invested assets, the level of certain market interest rates and the discount rate used to determine pension obligations. Unfavorable returns on plan assets or unfavorable changes in applicable laws or regulations could materially change the timing and amount of required plan funding, which would reduce the cash available for our businesses. In addition, a decrease in the discount rate used to determine pension obligations could result in an increase in the valuation of pension obligations, which could affect the reported funding status of our pension plans and future contributions. Similarly, an increase in discount rates could increase the periodic pension cost in subsequent fiscal years. Our policy to recognize changes in the fair value of the pension assets and liabilities annually through mark to market accounting could result in volatility in our results of operations, which could be material. In addition, our pension and postretirement benefit plan obligations are currently underfunded, and we may have to make significant cash payments to some or all of these plans, which would reduce the cash available for our businesses.

Under the Employee Retirement Income Security Act of 1974, as amended, the Pension Benefit Guaranty Corporation (“PBGC”) has the authority to terminate an underfunded tax-qualified pension plan under limited circumstances. In the event our tax-qualified pension plans are terminated by the PBGC, we could be liable to the PBGC for some portion of the underfunded amount.

Business disruptions from natural, operational and other catastrophic risks could seriously harm our operations and financial performance. In addition, a catastrophic event at one of our facilities or involving our products or employees could lead to liabilities that could further impair our operations and financial performance.

Business disruptions, including those related to operating hazards inherent with the production of lubricants, natural disasters, severe weather conditions, supply or logistics disruptions, increasing costs for energy, temporary plant and/or power outages, information technology systems and network disruptions, cyber-security breaches, terrorist attacks, armed conflicts, war, pandemic diseases, fires, floods or other catastrophic events, could seriously harm our operations, as well as the operations of our customers and suppliers, and may adversely impact our financial performance. Although it is impossible to predict the occurrence or consequences of any such events, they could result in reduced demand for our products, make it difficult or impossible for us to

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manufacture our products or deliver products and services to our customers or to receive raw materials from suppliers, or create delays and inefficiencies in the supply chain. In addition to leading to a serious disruption of our businesses, a catastrophic event at one of our facilities or involving our products or employees could lead to substantial legal liability to or claims by parties allegedly harmed by the event.

While we maintain business continuity plans that are intended to allow us to continue operations or mitigate the effects of events that could disrupt our business, we cannot provide assurances that our plans would fully protect us from all such events. In addition, insurance maintained by us to protect against property damage, loss of business and other related consequences resulting from catastrophic events is subject to coverage limitations, depending on the nature of the risk insured. This insurance may not be sufficient to cover all of our damages or damages to others in the event of a catastrophe. In addition, insurance related to these types of risks may not be available now or, if available, may not be available in the future at commercially reasonable rates.

We have incurred, and will continue to incur, substantial costs as a result of environmental, health and safety (“EHS”), and hazardous substances liabilities and related compliance requirements. These costs could adversely impact our cash flow, and, to the extent they exceed our established reserves for these liabilities, our results of operations or financial condition.

We are subject to extensive federal, state, local and foreign laws, regulations, rules and ordinances relating to pollution, protection of the environment and human health and safety, as well as the generation, storage, handling, treatment, disposal and remediation of hazardous substances and waste materials. We have incurred, and will continue to incur, significant costs and capital expenditures to comply with these laws and regulations.

EHS regulations change frequently, and such regulations and their enforcement have tended to become more stringent over time. Accordingly, changes in EHS laws and regulations and the enforcement of such laws and regulations could interrupt our operations, require modifications to our facilities or cause us to incur significant liabilities, costs or losses that could adversely affect our profitability. Actual or alleged violations of EHS laws and regulations could result in restrictions or prohibitions on plant operations as well as substantial damages, penalties, fines, civil or criminal sanctions and remediation costs.

Our business involves the production, storage and transportation of hazardous substances. Under some environmental laws, we may be strictly liable and/or jointly and severally liable for environmental damages caused by releases of hazardous substances and waste materials into the environment. For instance, under relevant laws and regulations we may be deemed liable for soil and/or groundwater contamination at sites we currently own and/or operate even though the contamination was caused by a third party such as a former owner or operator, and at sites we formerly owned and operated if the release of hazardous substances or waste materials was caused by us or by a third party during the period we owned and/or operated the site. We also may be deemed liable for soil and/or groundwater contamination at sites to which we sent hazardous wastes for treatment or disposal, notwithstanding that the original treatment or disposal activity accorded with all applicable regulatory requirements.

We are responsible for, and have financial exposure to, liabilities from pending and threatened claims which could adversely impact our results of operations and cash flow.

There are various claims, lawsuits and administrative proceedings pending or threatened against us. Such actions are with respect to commercial matters, false advertising, product liability, toxic tort liability and other matters that seek remedies or damages, some of which are for substantial amounts. While these actions are being contested, their outcome is not predictable. Our results could be adversely affected by financial exposure to these liabilities. Further, as a potential successor to Ashland, we may be subject to a consent order dated January 5, 1998 with the U.S. Federal Trade Commission arising out of charges that ads for our TM8 Engine Treatment product contained claims that were unsubstantiated. Under the consent order, which expires January 5, 2018, we may not make unsubstantiated claims about the performance or attributes of any engine treatment in the future or misrepresent results of tests or studies used to support our claims. We have agreed to indemnify Ashland for any

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liability arising out of the consent order. We could also be subject to additional legal proceedings in the future that may adversely affect our business, including administrative proceedings, class actions, employment and personal injury claims, disputes with current or former suppliers, claims by current or former franchisees and intellectual property claims.

Insurance maintained by us to protect against claims for damages alleged by third parties is subject to coverage limitations, depending on the nature of the risk insured. This insurance may not be sufficient to cover all of our liabilities to others. In addition, insurance related to these types of risks may not be available now or, if available, may not be available in the future at commercially reasonable rates.

Our substantial indebtedness may adversely affect our business, results of operations and financial condition.

After giving effect to the separation and contribution transactions and the application of the net proceeds of this offering, we expect to have outstanding indebtedness of approximately $750.0 million. Our substantial indebtedness could adversely affect our business, results of operations and financial condition by, among other things:

In addition, we may not be able to generate sufficient cash flow from our operations to repay our indebtedness when it becomes due and to meet our other cash needs. If we are not able to pay our debts as they become due, we could be in default under the terms of our indebtedness. We might also be required to pursue one or more alternative strategies to repay indebtedness, such as selling assets, refinancing or restructuring our indebtedness or selling additional debt or equity securities. We may not be able to refinance our debt or sell additional debt or equity securities or our assets on favorable terms, if at all, and if we must sell our assets, we may negatively affect our ability to generate revenues.

If we are unable to access the capital markets or obtain bank credit, our financial position, growth plans, liquidity and results of operations could be negatively impacted.

We are dependent on a stable, liquid, and well-functioning financial system to fund our operations and capital investments. In particular, we may rely on the public or private debt markets to fund portions of our capital investments and the commercial paper market and bank credit facilities to fund seasonal needs for working capital. Our access to these markets depends on multiple factors including the condition of debt capital markets, our operating performance and our credit ratings. If rating agencies lower our credit ratings, it could adversely impact our ability to access the debt markets, our cost of funds and other terms for new debt issuances. Each of the credit rating agencies reviews its rating periodically, and there is no guarantee our current credit rating will remain the same. In connection with Valvoline Finco Two’s issuance of senior unsecured notes in July

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2016, Moody’s Investors Services, Inc., one of such credit rating agencies, stated that in the event that the net proceeds from this offering are less than $500 million, it would expect to lower our credit ratings by one “notch” to reflect our higher leverage in that scenario.

We are subject to payment-related risks for owned VIOC stores.

At our owned VIOC stores, we accept a variety of payment methods, including credit cards and debit cards. Accordingly, we are, and will continue to be, subject to significant and evolving regulations and compliance requirements, including obligations to implement enhanced authentication processes that could result in increased costs, reduce the ease of use of certain payment methods and expand liability for us. For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time. We rely on independent service providers for payment processing, including credit and debit cards. If these independent service providers become unwilling or unable to provide these services to us or if the cost of using these providers increases, our business could be harmed. We are also subject to payment card association operating rules, including data security rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. If we fail to comply with these rules or requirements, or if our data security systems are breached or compromised, we may be liable for losses incurred by card issuing banks or consumers, subject to fines and higher transaction fees, lose our ability to accept credit and debit card payments from our customers or process electronic fund transfers or facilitate other types of payments and our brand, business and results of operations could be significantly harmed.

Risks Related to Our Separation from Ashland

The spin-off may not occur and the separation may not be successful.

Upon completion of this offering, we will be a standalone public company, although we will continue to be controlled by Ashland. Ashland has announced its intention to consummate the spin-off approximately six months after the closing of this offering. However, Ashland may abandon or change the structure of the spin-off if it determines, in its sole discretion, that the spin-off is not in the best interest of Ashland or its shareholders. Such determination may take into account, without limitation, the potential impact on the spin-off of a change in control of Ashland.

In addition, the process of becoming a standalone public company may distract our management from focusing on our business and strategic priorities. Further, although we expect to have direct access to the debt and equity capital markets following this offering, we may not be able to issue debt or equity on terms acceptable to us or at all. Moreover, even with equity compensation tied to our business, we may not be able to attract and retain employees as desired. We also may not fully realize the anticipated benefits of being a standalone public company if any of the risks identified in this “Risk Factors” section, or other events, were to occur. If we do not realize these anticipated benefits for any reason, our business may be negatively affected. In addition, the separation could adversely affect our operating results and financial condition.

As long as Ashland controls us, your ability to influence matters requiring shareholder approval will be limited.

After this offering, Ashland will own 170,000,000 shares of our common stock, representing 85% of the total outstanding shares of our common stock (or approximately 83% if the underwriters exercise their overallotment option in full). For so long as Ashland beneficially owns shares of our common stock representing at least a majority of the votes entitled to be cast by the holders of our outstanding common stock, Ashland will be able to elect all of the members of our board of directors. Upon completion of this offering, three members of our board of directors, William A. Wulfsohn, Stephen F. Kirk and Vada O. Manager, will also be members of the Ashland board of directors. Mr. Wulfsohn is the Chairman and Chief Executive Officer of Ashland.

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The spin-off could result in significant tax liability to Ashland, and in certain circumstances, we could be required to indemnify Ashland for material taxes pursuant to indemnification obligations under the Tax Matters Agreement.

Ashland expects to obtain a written opinion of counsel to the effect that the spin-off should qualify for non-recognition of gain and loss under Section 355 of the Internal Revenue Code of 1986, as amended (the “Code”). The opinion of counsel would not address any U.S. state or local or foreign tax consequences of the spin-off. The opinion will assume that the spin-off will be completed according to the terms of the Separation Agreement and will rely on the facts as described in the Separation Agreement, the Tax Matters Agreement, other ancillary agreements, the information statement to be distributed to Ashland’s shareholders in connection with the spin-off and a number of other documents. In addition, the opinion will be based on certain representations as to factual matters from, and certain covenants by, Ashland and us. The opinion cannot be relied on if any of the assumptions, representations or covenants is incorrect, incomplete or inaccurate or is violated in any material respect.

The opinion of counsel will not be binding on the Internal Revenue Service (the “IRS”) or the courts, and there can be no assurance that the IRS or a court will not take a contrary position. Ashland has not requested, and does not intend to request, a ruling from the IRS regarding the U.S. federal income tax consequences of the spin-off.

If the spin-off were determined not to qualify for non-recognition of gain and loss, then Ashland would recognize gain as if it had sold our common stock in a taxable transaction in an amount up to the fair market value of our common stock it distributed in the spin-off. In addition, certain reorganization transactions undertaken in connection with the separation and the spin-off could be determined to be taxable, which could result in additional taxable gain. Under certain circumstances, as described in “Certain Relationships and Related Party Transactions—Relationship with Ashland—Tax Matters Agreement,” we could have an indemnification obligation to Ashland with respect to tax on some or all of such gain.

We could have an indemnification obligation to Ashland if events or actions subsequent to the spin-off cause the spin-off to be taxable.

If, due to breaches of covenants that we will agree to in connection with the separation or the spin-off, it were determined that the spin-off did not qualify for non-recognition of gain and loss, we could be required to indemnify Ashland for the resulting taxes (and reasonable expenses). In addition, Section 355(e) of the Code generally creates a presumption that the spin-off would be taxable to Ashland, but not to its shareholders, if we or our shareholders were to engage in transactions that result in a 50% or greater change (by vote or value) in the ownership of our stock during the four-year period beginning on the date that begins two years before the date of the spin-off, unless it were established that such transactions and the spin-off were not part of a plan or series of related transactions. If the spin-off were taxable for U.S. federal income tax purposes to Ashland due to a breach of our covenants or a 50% or greater change in the ownership of our stock, Ashland would recognize gain as if it had sold our common stock in a taxable transaction in an amount up to the fair market value of our stock held by it immediately before the spin-off, and we generally would be required to indemnify Ashland for the tax on such gain and related expenses, as well as any additional gain in connection with certain reorganization transactions undertaken to effect the separation and the spin-off. Any such obligation could have a material impact on our operations. See “Certain Relationships and Related Party Transactions—Relationship with Ashland—Tax Matters Agreement” for more information.

We intend to agree to numerous restrictions to preserve the tax-free nature of the spin-off, which may reduce our strategic and operating flexibility.

We intend to agree in the Tax Matters Agreement to covenants and indemnification obligations designed to preserve the tax-free nature of the spin-off. These covenants and indemnification obligations may limit our ability to pursue strategic transactions or engage in new businesses or other transactions that might be beneficial and could discourage or delay a strategic transaction that our shareholders may consider favorable. See “Certain Relationships and Related Party Transactions—Relationship with Ashland—Tax Matters Agreement” for more information.

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Although we expect to enter into the Tax Matters Agreement under which the amount of our tax sharing payments to Ashland after this offering will generally be determined as if we filed our own consolidated, combined or separate tax returns, we nevertheless will have joint and several liability with Ashland for the consolidated U.S. federal income taxes of the Ashland consolidated group. In addition, we expect to agree to indemnify Ashland for certain pre-offering U.S. taxes that arise on audit and are directly attributable to neither the Valvoline business nor Ashland’s specialty ingredients and performance materials businesses (collectively, the “Chemicals business”).

We will be included in the U.S. federal consolidated group tax return, and possibly certain combined or similar group tax returns, with Ashland (“Ashland Group Returns”) for the period starting approximately on the date of the closing of this offering and through the date of the spin-off (the “Interim Period”). Under the Tax Matters Agreement, Ashland will generally make all necessary tax payments to the relevant tax authorities with respect to Ashland Group Returns, and we will make tax sharing payments to Ashland. The amount of our tax sharing payments will generally be determined as if we and each of our relevant subsidiaries included in the Ashland Group Returns filed our own consolidated, combined or separate tax returns for the Interim Period that include only us and/or our relevant subsidiaries, as the case may be.

For taxable periods that begin on or after the day after the date of the spin-off, we will no longer be included in any Ashland Group Returns and will file tax returns that include only us and/or our subsidiaries, as appropriate. We will not be required to make tax sharing payments to Ashland for those taxable periods. Nevertheless, we have (and will continue to have following the spin-off) joint and several liability with Ashland to the IRS for the consolidated U.S. federal income taxes of the Ashland consolidated group for the taxable periods in which we were part of the Ashland consolidated group.

Pursuant to the terms of the Tax Matters Agreement, we expect to indemnify Ashland for certain U.S. federal, state or local taxes for any tax period prior to the closing of this offering (the “Pre-IPO Period”) of Ashland and/or its subsidiaries for that period that arise on audit or examination and are directly attributable to neither the Valvoline business nor the Chemicals business. Any payment obligations that may arise as a result of our assuming liability for such taxes could negatively affect our financial position and cash flows. See “Certain Relationships and Related Party Transactions—Relationship with Ashland—Tax Matters Agreement.”

We have no operating history as a standalone public company, and our historical and pro forma financial information is not necessarily representative of the results we would have achieved as a standalone public company and may not be a reliable indicator of our future results.

The historical financial information we have included in this prospectus does not reflect, and the pro forma financial information included in this prospectus may not reflect, what our financial position, results of operations or cash flows would have been had we been a standalone entity during the historical periods presented, or what our financial position, results of operations or cash flows will be in the future as an independent entity.

The pro forma financial information included in this prospectus includes adjustments based upon available information we believe to be reasonable. However, the assumptions may change and actual results may differ. In addition, we have not made pro forma adjustments to reflect many significant changes that will occur in our cost structure, funding and operations as a result of our transition to becoming a public company, including changes in our employee base, potential increased costs associated with reduced economies of scale and increased costs associated with being a publicly traded, standalone company. For additional information about the basis of presentation of our pro forma financial information and historical financial information included in this prospectus, see “Selected Combined Financial Data” and “Unaudited Pro Forma Condensed Combined Financial Statements.”

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If Ashland experiences a change in control, our current plans and strategies could be subject to change.

As long as Ashland controls us, it will have significant influence over our plans and strategies, including strategies relating to marketing and growth. In the event Ashland experiences a change in control, a new Ashland owner may attempt to cause us to revise or change our plans and strategies, as well as the agreements between Ashland and us, described in this prospectus. A new owner may also have different plans with respect to the contemplated spin-off of our common stock to Ashland shareholders, including not affecting such a spin-off.

Our ability to operate our business effectively may suffer if we are unable to cost-effectively establish our own administrative and other support functions in order to operate as a standalone company after the expiration of our shared services and other intercompany agreements with Ashland.

As a business segment of Ashland, we relied on administrative and other resources of Ashland, including information technology, accounting, finance, human resources and legal, to operate our business. In connection with this offering, we have entered into various service agreements to retain the ability for specified periods to use these Ashland resources. See “Certain Relationships and Related Party Transactions.” These services may not be provided at the same level as when we were a business segment within Ashland, and we may not be able to obtain the same benefits that we received prior to this offering. These services may not be sufficient to meet our needs, and after our agreements with Ashland expire (which will generally occur within 24 months following the closing of this offering), we may not be able to replace these services at all or obtain these services at prices and on terms as favorable as we currently have with Ashland. We will need to create our own administrative and other support systems or contract with third parties to replace Ashland’s systems. In addition, we have received informal support from Ashland which may not be addressed in the agreements we have entered into with Ashland, and the level of this informal support may diminish as we become a more independent company. Any failure or significant downtime in our own administrative systems or in Ashland’s administrative systems during the transitional period could result in unexpected costs, impact our results and/or prevent us from paying our suppliers or employees and performing other administrative services on a timely basis.

After this offering, we will be a smaller company relative to Ashland, which could result in increased costs because of a decrease in our purchasing power.

Prior to this offering, we were able to take advantage of Ashland’s size and purchasing power in procuring goods, technology and services, including insurance, employee benefit support and audit and other professional services. We are a smaller company than Ashland, and we cannot assure you that we will have access to financial and other resources comparable to those available to us prior to this offering. As a standalone company, we may be unable to obtain office space, goods, technology and services at prices or on terms as favorable as those available to us prior to this offering, which could increase our costs and reduce our profitability.

In order to preserve the ability for Ashland to distribute its shares of our common stock on a tax-free basis, we may be prevented from pursuing opportunities to raise capital, to effectuate acquisitions or to provide equity incentives to our employees, which could hurt our ability to grow.

Beneficial ownership by Ashland of at least 80% of the total voting power of our classes of voting stock and 80% of each class of our non-voting stock is required in order for Ashland to effect the spin-off of us or certain other tax-free transactions. We have agreed that, so long as the spin-off could, in the reasonable discretion of Ashland, be effectuated, we will not knowingly take or fail to take, or permit any of our affiliates to knowingly take or fail to take, any action that could reasonably be expected to preclude Ashland’s ability to effectuate the spin-off. As a result, we may be precluded from pursuing certain growth initiatives, including the creation of a class of non-voting stock.

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Ashland has agreed to indemnify us for certain liabilities. However, there can be no assurance that the indemnity will be sufficient to insure us against the full amount of such liabilities, or that Ashland’s ability to satisfy its indemnification obligation will not be impaired in the future.

Pursuant to the Separation Agreement and certain other agreements with Ashland, Ashland has agreed to indemnify us for certain liabilities. However, third parties could also seek to hold us responsible for any of the liabilities that Ashland has agreed to retain, and there can be no assurance that the indemnity from Ashland will be sufficient to protect us against the full amount of such liabilities, or that Ashland will be able to fully satisfy its indemnification obligations in the future. Even if we ultimately succeed in recovering from Ashland any amounts for which we are held liable, we may be temporarily required to bear these losses. Each of these risks could negatively affect our business, financial position, results of operations and cash flows.

Some of our directors and executive officers own Ashland common stock, restricted shares of Ashland common stock or options to acquire Ashland common stock and hold positions with Ashland, which could cause conflicts of interest, or the appearance of conflicts of interest, that result in our not acting on opportunities we otherwise may have.

Some of our directors and executive officers own Ashland common stock, restricted shares of Ashland stock or options to purchase Ashland common stock. In addition, Mr. Wulfsohn will serve as the Non-Executive Chairman of our board of directors, while retaining his role as Chairman and Chief Executive Officer of Ashland. Stephen E. Kirk and Vada O. Manager, who will also serve on our board of directors, are independent directors of Ashland.

Ownership of Ashland common stock, restricted shares of Ashland common stock and options to purchase Ashland common stock by our directors and executive officers after this offering and the presence of executive officers or directors of Ashland on our board of directors could create, or appear to create, conflicts of interest with respect to matters involving both us and Ashland that could have different implications for Ashland than they do for us. For example, potential conflicts of interest could arise in connection with the resolution of any dispute between Ashland and us regarding terms of the agreements governing the separation and the relationship between Ashland and us thereafter, including the Separation Agreement, the employee matters agreement, the Tax Matters Agreement, the transition services agreements or any other commercial agreements between Ashland and us. Potential conflicts of interest could also arise if we enter into commercial arrangements with Ashland in the future. As a result of these actual or apparent conflicts of interest, we may be precluded from pursuing certain growth initiatives.

Ashland’s ability to control our board of directors may make it difficult for us to recruit high-quality independent directors.

So long as Ashland beneficially owns shares of our common stock representing at least a majority of the votes entitled to be cast by the holders of our outstanding voting stock, Ashland can effectively control and direct our board of directors. Following the completion of this offering, three members of our board of directors will also be members of the Ashland board of directors. Further, the interests of Ashland and our other shareholders may diverge. Under these circumstances, persons who might otherwise accept our invitation to join our board of directors may decline.

Our inability to resolve favorably any disputes that arise between us and Ashland with respect to our past and ongoing relationships may adversely affect our operating results.

Disputes may arise between Ashland and us in a number of areas relating to our ongoing relationships, including:

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We may not be able to resolve potential conflicts, and even if we do, the resolution may be less favorable than if we were dealing with an unaffiliated party.

The agreements we have entered into with Ashland may be amended upon agreement between the parties. While we are controlled by Ashland, we may not have the leverage to negotiate amendments to these agreements, if required, on terms as favorable to us as those we would negotiate with an unaffiliated third party.

We will be a “controlled company” within the meaning of the NYSE rules and, as a result, we intend to rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.

After the completion of this offering, Ashland will own more than 50% of the total voting power of our common stock and we will be a “controlled company” under the NYSE corporate governance standards. As a controlled company, certain exemptions under the NYSE corporate governance standards free us from the obligation to comply with certain of the NYSE corporate governance requirements, including the requirements:

Although we intend to comply with these requirements, we will not be required to provide the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of the NYSE. In the event that we cease to be a controlled company within the meaning of the NYSE rules, we will be required to comply with these requirements after specified transition periods.

We may have received better terms from unaffiliated third parties than the terms we will receive in the agreements we expect to enter into with Ashland.

The agreements we expect to enter into with Ashland in connection with the separation, including the Separation Agreement, a transition services agreement, a reverse transition services agreement, the Tax Matters Agreement, an employee matters agreement, an equity registration rights agreement with respect to Ashland’s continuing ownership of our common stock, a shared environmental liabilities agreement and certain other commercial agreements, were prepared in the context of the separation while we were still a wholly owned subsidiary of Ashland. See “Certain Relationships and Related Party Transactions—Relationship with Ashland.” Accordingly, during the period in which the terms of those agreements were prepared, we did not have an independent board of directors or a management team that was independent of Ashland. As a result, the terms of those agreements may not reflect terms that would have resulted from arm’s-length negotiations between unaffiliated third parties.

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Risks Related to This Offering and Ownership of Our Common Stock

No market currently exists for our common stock. We cannot assure you that an active trading market will develop for our common stock.

Prior to this offering, there has been no public market for shares of our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of a trading market on the NYSE or otherwise, or how liquid that market might become. If an active market does not develop, you may have difficulty selling any shares of our common stock that you purchase in this initial public offering. The initial public offering price for the shares of our common stock will be determined by negotiations between us and the representatives of the underwriters, and may not be indicative of prices that will prevail in the open market following this offering.

If our stock price fluctuates after this offering, you could lose a significant part of your investment.

The market price of our common stock will be influenced by many factors, some of which are beyond our control, including those described above in “—Risks Related to Our Business” and the following:

As a result of these factors, investors in our common stock may not be able to resell their shares at or above the initial offering price or may not be able to resell them at all. These broad market and industry factors may materially reduce the market price of our common stock, regardless of our operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock is low.

We may change our dividend policy at any time.

Although following this offering we initially expect to pay quarterly cash dividends to holders of our common stock, we have no obligation to pay any dividend, and our dividend policy may change at any time without notice to our shareholders. The declaration and amount of any future dividends to holders of our common stock will be at the discretion of our board of directors in accordance with applicable law and after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs, cash flows, impact on our effective tax rate, indebtedness, contractual obligations, legal requirements and other factors that our board of directors deems relevant. As a result, we cannot assure you that we will pay dividends at any rate or at all.

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Future sales, or the perception of future sales, of our common stock may depress the price of our common stock.

The market price of our common stock could decline significantly as a result of sales or other distributions of a large number of shares of our common stock in the market after this offering, including shares which might be offered for sale or distributed by Ashland. The perception that these sales might occur could depress the market price of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

Upon completion of this offering, we will have 200,000,000 shares of common stock (204,500,000 shares if the underwriters exercise their overallotment option in full) outstanding. The shares of common stock offered in this offering will be freely tradable without restriction under the Securities Act of 1933, as amended (the “Securities Act”), except for any shares of common stock that may be held or acquired by our directors, executive officers and other affiliates, as that term is defined in the Securities Act, which will be restricted securities under the Securities Act. Restricted securities may not be sold in the public market unless the sale is registered under the Securities Act or an exemption from registration is available. We will grant registration rights to Ashland with respect to shares of our common stock. Any shares registered pursuant to the registration rights agreement described in “Certain Relationships and Related Party Transactions” will be freely tradable in the public market following a 180-day lock-up period as described below.

In connection with this offering, we, our directors and executive officers and Ashland have each agreed to enter into a lock-up agreement and thereby be subject to a lock-up period, meaning that they and their permitted transferees will not be permitted to sell any of the shares of our common stock for 180 days after the date of this prospectus, without the prior consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC on behalf of the underwriters. Although we have been advised that there is no present intention to do so, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC, on behalf of the underwriters may, in their sole discretion and without notice, release all or any portion of the shares of our common stock from the restrictions in any of the lock-up agreements described above. See “Underwriting (Conflicts of Interest).”

Also, in the future, we may issue our securities in connection with investments or acquisitions. The amount of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock.

You will experience immediate and substantial dilution in the net tangible book value of the shares you purchase in this offering, and you will suffer additional dilution if the underwriters exercise their overallotment option.

If you purchase shares of our common stock in this offering, you will experience immediate and substantial dilution, as the initial public offering price of our common stock will be substantially greater than the pro forma net tangible book value per share of our common stock. Based on the assumed initial offering price of $21.50 per share, the midpoint of the price range set forth on the cover page of this prospectus, if you purchase our common stock in this offering, you will suffer immediate and substantial dilution of approximately $25.96 per share. In connection with the separation, we will assume Ashland stock-based compensation awards of our employees, which may result in additional dilution to investors in this offering.

Our costs will increase significantly as a result of operating as a public company, and our management will be required to devote substantial time to complying with public company regulations.

We have historically operated our business as a division of a public company. As a standalone public company, we will have additional legal, accounting, insurance, compliance and other expenses that we have not incurred historically. After this offering, we will become obligated to file with the Securities and Exchange Commission (“SEC”) annual and quarterly reports and other reports that are specified in Section 13 and other

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sections of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We will also be required to ensure that we have the ability to prepare financial statements that are fully compliant with all SEC reporting requirements on a timely basis. In addition, we will become subject to other reporting and corporate governance requirements, including certain requirements of the NYSE, and certain provisions of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and the regulations promulgated thereunder, which will impose significant compliance obligations upon us.

Sarbanes-Oxley, as well as rules subsequently implemented by the SEC and the NYSE, have imposed increased regulation and disclosure and required enhanced corporate governance practices of public companies. We are committed to maintaining high standards of corporate governance and public disclosure, and our efforts to comply with evolving laws, regulations and standards in this regard are likely to result in increased selling and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. These changes will require a significant commitment of additional resources. We may not be successful in implementing these requirements and implementing them could materially adversely affect our business, results of operations and financial condition. In addition, if we fail to implement the requirements with respect to our internal accounting and audit functions, our ability to report our operating results on a timely and accurate basis could be impaired. If we do not implement such requirements in a timely manner or with adequate compliance, we might be subject to sanctions or investigation by regulatory authorities, such as the SEC or the NYSE. Any such action could harm our reputation and the confidence of investors and customers in our company and could materially adversely affect our business and cause our share price to fall.

Failure to achieve and maintain effective internal controls in accordance with Section 404 of Sarbanes-Oxley could have a material adverse effect on our business and stock price.

As a public company, we will be required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of Sarbanes-Oxley, which will require annual management assessments of the effectiveness of our internal control over financial reporting and a report by our independent registered public accounting firm that addresses the effectiveness of internal control over financial reporting. During the course of our testing, we may identify deficiencies which we may not be able to remediate in time to meet our deadline for compliance with Section 404. Testing and maintaining internal control can divert our management’s attention from other matters that are important to the operation of our business. We also expect the regulations under Sarbanes-Oxley to increase our legal and financial compliance costs, make it more difficult to attract and retain qualified officers and members of our board of directors, particularly to serve on our audit committee, and make some activities more difficult, time consuming and costly. We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 or our independent registered public accounting firm may not be able or willing to issue an unqualified report on the effectiveness of our internal control over financial reporting. If we conclude that our internal control over financial reporting is not effective, we cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or their effect on our operations because there is presently no precedent available by which to measure compliance adequacy. If either we are unable to conclude that we have effective internal control over financial reporting or our independent auditors are unable to provide us with an unqualified report as required by Section 404, then investors could lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.

If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our stock or if our operating results do not meet their expectations, our stock price could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if one or more of the analysts who cover our company downgrades our stock or if our operating results do not meet their expectations, our stock price could decline.

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We could be subject to securities class action litigation.

In the past, securities class action litigation has often been instituted against companies whose securities have experienced periods of volatility in market price. Securities litigation brought against us following volatility in the price of our common stock, regardless of the merit or ultimate results of such litigation, could result in substantial costs, which would hurt our financial condition and results of operations and divert management’s attention and resources from our business.

Anti-takeover provisions in our charter documents and under Kentucky law could discourage, delay or prevent a change in control of our company and may result in an entrenchment of management and diminish the value of our common stock.

Several provisions of our amended and restated certificate of incorporation and amended and restated by-laws could make it difficult for our shareholders to change the composition of our board of directors, preventing them from changing the composition of management. In addition, the same provisions may discourage, delay or prevent a merger or acquisition that our shareholders may consider favorable.

These include:

These anti-takeover provisions could substantially impede the ability of our shareholders to benefit from a change in control and, as a result, could materially adversely affect the market price of our common stock and your ability to realize any potential change-in-control premium. You should carefully review our amended and restated articles of incorporation and our amended and restated by-laws, forms of which are filed as exhibits to the registration statement of which this prospectus is a part, which will govern your rights as a shareholder, as well as “Description of Capital Stock” and the provisions of applicable Kentucky law.

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Our board of directors will have the ability to issue blank check preferred stock, which may discourage or impede acquisition attempts or other transactions.

Our board of directors will have the power, subject to applicable law, to issue series of preferred stock that could, depending on the terms of the series, impede the completion of a merger, tender offer or other takeover attempt. For instance, subject to applicable law, a series of preferred stock may impede a business combination by including class voting rights, which would enable the holder or holders of such series to block a proposed transaction. Our board of directors will make any determination to issue shares of preferred stock on its judgment as to our and our shareholders’ best interests. Our board of directors, in so acting, could issue preferred stock having terms which could discourage an acquisition attempt or other transaction that some, or a majority, of the shareholders may believe to be in their best interests or in which shareholders would have received a premium for their stock over the then prevailing market price of the stock.

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