U.S. chemical producer Ashland has agreed to sell its water technologies unit for about $1.8 billion to a fund managed by Clayton, Dubilier & Rice.

The water treatment unit, which generates annual sales of $1.7 billion and employs about 3,000 people worldwide, supplies specialty chemicals and services to the pulp and paper and industrial water markets. It also makes biocides, coagulants and wood adhesives.

Ashland said it plans to use net proceeds of $1.4 billion from the deal, which is expected to close by the end of its fiscal year on Sept. 30, to fund a $1.35 billion share buyback program. The repurchase program would replaces the company's previous $600 million buyback program that expires at the end of 2015.

"This divestiture allows us to focus on our core specialty chemicals business and to accelerate return of capital to shareholders," said Ashland CEO Chief James O'Brien.

According to the news agency Reuters, the company conducted negotiations about the water technologies unit with at least seven private equity firms.