UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                          Washington, D. C. 20549

                               --------------
                                  FORM 8-K
                               --------------

                               CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of
                    the Securities Exchange Act of 1934

      Date of report (Date of earliest event reported): August 18, 2006


                                ASHLAND INC.
           (Exact name of registrant as specified in its charter)


                                  Kentucky
               (State or other jurisdiction of incorporation)


        1-32532                                       20-0865835
(Commission File Number)               (I.R.S. Employer Identification No.)

          50 E. RiverCenter Boulevard, Covington, Kentucky 41011
            (Address of principal executive offices) (Zip Code)

               P.O. Box 391, Covington, Kentucky 41012-0391
                       (Mailing Address) (Zip Code)

     Registrant's telephone number, including area code (859) 815-3333

Check the  appropriate  box below if the Form 8-K  filing  is  intended  to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:

[ ]    Written communications pursuant to Rule 425 under the Securities Act
       (17 CFR 230.425)

[ ]    Soliciting  material  pursuant to Rule 14a-12 under the Exchange Act
       (17 CFR 240.14a-12)

[ ]    Pre-commencement  communications pursuant to Rule 14d-2(b) under the
       Exchange Act (17 CFR 240.14d-2(b))

[ ]    Pre-commencement  communications pursuant to Rule 13e-4(c) under the
       Exchange Act (17 CFR 240.13e-4(c))


                                    -1-

Item 1.01. Entry into a Material Definitive Agreement Today, Ashland Inc. ("Ashland") announced that it entered into a stock purchase agreement (the "Agreement") with Oldcastle Materials, Inc. ("Oldcastle") on August 19, 2006, pursuant to which Oldcastle would purchase all issued and outstanding shares of common stock in Ashland's wholly owned subsidiary, Ashland Paving And Construction, Inc. (together with its subsidiaries, "APAC"). Ashland announced the signing of the Agreement in a press release issued on August 21, 2006, which is attached hereto as Exhibit 99.1 and incorporated by reference herein. The parties plan to close the transaction by the end of the month. The purchase price for APAC under the Agreement is $1.30 billion, subject to a post-closing adjustment for any changes in specified balance sheet items (primarily working capital accounts) from September 30, 2005, to the closing date. Oldcastle's obligations under the Agreement are guaranteed by Oldcastle's United States parent, Oldcastle, Inc. The Agreement includes customary representations, warranties and covenants. Breaches of such provisions would be subject to mutual indemnification obligations, certain of which would be limited by a deductible and a cap on the amount of liability. Ashland also would agree to indemnify Oldcastle for liabilities with respect to certain environmental matters. A complete copy of the Agreement will be filed with Ashland's Form 10-K for the fiscal year ending September 30, 2006, or after closing but prior to the submission of that periodic report. Oldcastle will be responsible for the payment of any post-closing employment-related liabilities that arise under severance and retention agreements that Ashland has entered into with certain employees, including the Retention and Severance Letter Agreement for APAC President Robert K. Randolph, entered into on August 18, 2006, which is attached hereto as Exhibit 10.1 and provides for severance payments in the event of termination and a retention bonus of $350,000 which would be payable by Ashland in the event the transaction with Oldcastle failed to close. The parties have received clearance for the transaction under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and their other respective obligations to close the transaction are subject to customary conditions. The Agreement includes customary termination provisions and, in any event, can be terminated if closing does not occur on or prior to October 2, 2006. Item 8.01. Other Items Today, Ashland also announced in the press release referenced in Item 1.01 above that, at the company's September board meeting, Ashland management intends to recommend to its board of directors that substantially all of the net after-tax proceeds from the sale of APAC be used to fund the completion of the existing share repurchase authorization, an additional share repurchase authorization and a special cash dividend. The aggregate share repurchases under the existing authorization and, if approved, the additional share repurchase authorization would be limited to approximately 10 million -2-

shares. There can be no assurance that the board of directors will accept management's recommendation. Item 9.01. Financial Statements and Exhibits (d) Exhibits 10.1 Retention and Severance Letter Agreement for Robert K. Randolph entered into on August 18, 2006. 99.1 Press Release dated August 21, 2006. Forward-Looking Statements This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include those that refer to Ashland's operating performance and expectations about the APAC transaction, including those statements that refer to the expected benefits of the transaction and management's recommendation of anticipated use of proceeds and expected benefits to Ashland's shareholders. Although Ashland believes its expectations are based on reasonable assumptions, it cannot assure the expectations reflected herein will be achieved. The risks, uncertainties and assumptions include the possibility that Ashland will be unable to fully realize the benefits anticipated from the transaction, the possibility that the transaction may not close, and other risks that are described from time to time in the Securities and Exchange Commission (SEC) reports of Ashland. Other factors and risks affecting Ashland are contained in Ashland's Form 10-K, as amended, for the fiscal year ended Sept. 30, 2005, filed with the SEC and available on Ashland's Investor Relations website at www.ashland.com/investors or the SEC's website at www.sec.gov. Ashland undertakes no obligation to subsequently update or revise the forward-looking statements made in this news release to reflect events or circumstances after the date of this report. -3-

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ASHLAND INC. ------------------------------------------- (Registrant) August 21, 2006 /s/ J. Marvin Quin ------------------------------------------- J. Marvin Quin Senior Vice President and Chief Financial Officer -4-

EXHIBIT INDEX 10.1 Retention and Severance Letter Agreement for Robert K. Randolph entered into on August 18, 2006. 99.1 Press Release dated August 21, 2006. -5-

                                                               EXHIBIT 10.1

                             [GRAPHIC OMITTED]


Susan B. Esler                         Ashland Inc.
Vice President, Human Resources        50 E. RiverCenter Blvd.
                                       P.O. Box 391
                                       Covington, KY  41012-0391
                                       Tel: 859 815-3543, Fax: 859 815-3693


                                       August 15, 2006
- Via Federal Express -

Robert K. Randolph
130 Millwick Cove
Alpharetta, GA 30005

Dear Kirk:

     Ashland  Inc.  ("Ashland")  considers  the services you provide as the
President  of the APAC group of  companies  ("APAC") to be essential to its
continuing  operations.  Due to the  potential  change in ownership of APAC
("the  Transaction"),  Ashland would like to extend the following  offer to
you, in order to encourage your continued employment during this transition
period. Your acceptance of this offer (the "Letter Agreement") will rescind
and replace any other written or verbal agreements in place between you and
Ashland and/or APAC concerning your continued employment prior to the close
of the Transaction  and the severance  benefits you are eligible to receive
upon a termination of your employment.

     Subject to the conditions  provided in this Letter  Agreement,  in the
event you remain  employed  through the date on which one of the  following
events occurs (your "Stay Date"), then Ashland will provide you with a lump
sum payment ("Retention Bonus") of $350,000, less applicable  withholdings,
to be paid within 15 days of your Stay Date.

     Your Stay Date will be determined as follows:

     i)   In the event your active  employment  with  Ashland ends prior to
          the  close of the sale of APAC,  then your Stay Date will be your
          last day of active employment with Ashland;

     ii)  In the event you accept an offer of employment from the purchaser
          of the APAC  business (the  "Buyer"),  your Stay Date will be the
          earlier of 6 months from the date of your  transfer to Buyer,  or
          the date on which you are released from active  employment by the
          Buyer;

     iii) In the event your  position  with  Ashland is  eliminated  at the
          close of the Transaction, and you are not offered employment with
          the Buyer,  or you reject an offer of  non-equivalent  employment
          from the  Buyer,  then  your  Stay  Date will be your last day of
          active  employment  with  Ashland;  For the purpose of this offer
          "equivalent   employment"  means  an  offer  of  employment  that
          provides you with base compensation of at least the

Robert K. Randolph August 15, 2006 Page 2 of 4 same amount you are receiving in your current position, at a work location not more than 50 miles from your current work location. iv) In the event your active employment with Ashland does not end at the close of the Transaction, and you continue to provide transitional support to Ashland relating to the APAC business, then your Stay Date will be the earlier of 24 months from the date of the close of the Transaction, or your last day of active employment with Ashland; v) In the event the Transaction does not occur, then your Stay Date will be the date on which negotiations with potential buyers of APAC have concluded without an agreement for the sale of the business, and the decision is made not to seek other prospective buyers for the APAC business. In the event your active employment with Ashland terminates as a result of the Transaction, and you meet the conditions for receipt of severance benefits under the APAC Divestiture Severance Program for Executive Level Employees, a copy of which is enclosed, then in addition to the Retention Bonus provided for above, Ashland will offer to you a Separation Agreement and General Release, which will provide you with severance benefits under this program, with the following exceptions: i) your severance benefit shall be payroll continuation payments for the 24-month period following your Release Date; ii) you will continue to earn age and service credit for pension calculation purposes during your entire payroll continuation period; iii) although you are not retirement eligible, during your payroll continuation period you will be eligible to participate in company provided employee benefit programs as though you were a retirement eligible employee; v) any award you would otherwise be eligible to receive under any incentive compensation program in which you were a participant during FY 2006 will be calculated as though your were actively employed for the full year, regardless of whether your active employment ends prior to September 30, 2006. Your employment will then terminate on the last day of your payroll continuation period, and thereafter your treatment under Ashland's employee benefit plans will be on the same terms and conditions as apply to non-retirement eligible employees. Provided that all your Ashland Inc. stock options issued prior to September 2006, that continued to vest during your payroll continuation period, will become fully vested as of your termination date, and will thereafter be fully exercisable for their remaining term(s).

Robert K. Randolph August 15, 2006 Page 3 of 4 You understand that your Separation Agreement and General Release will contain a general release of any claims you may have against Ashland which you must sign as a condition of receiving these severance benefits. You further understand that these severance benefits will be in lieu of any benefits you would otherwise be eligible to receive upon termination under the terms of your Executive Employment Agreement. In addition to the above referenced severance benefits, on your last day of active employment with Ashland (your "Release Date") a pro-rata share of the restricted stock previously granted to you by Ashland will become fully vested. The pro-rata vesting schedule will be calculated based on the number of shares issued to you, multiplied by the percentage of the total grant period that has elapsed as of your Release Date. During the term of this Letter Agreement, you will continue to receive compensation at a rate at least equivalent to your level of base pay in effect at the time this Agreement is executed. Ashland agrees that you will also continue to be eligible to participate in those employee benefits in which you are a current participant to the same extent as other regular full-time employees, including participation in applicable incentive compensation plans. You agree that you will keep the terms of this Letter Agreement, as well as the terms of the earlier retention agreements offered to you, completely confidential, and that you will not hereafter disclose any information concerning any of these agreements to anyone except your immediate family, financial advisor and/or attorney; provided, that they agree in advance of said disclosure to keep this information confidential and not disclose it to others. You further understand that this agreement will immediately terminate (an "Early Termination"), and Ashland will be relieved of any obligation to provide the Retention Bonus or the additional benefits described above if any of the following occurs during the term of this Agreement: i) you voluntarily terminate your employment with Ashland; ii) you elect to accept a different position with Ashland that does not support the APAC business; iii) you violate the confidentiality provisions contained herein; iv) Ashland or Buyer terminates your employment for cause; For the purposes of this letter, termination for cause will arise if you: (a) substantially fail to perform your duties with Ashland or Buyer, unless such failure is due to your incapacity as a result of physical or mental illness; or (b) you engage in willful misconduct or gross negligence in performing your duties;

Robert K. Randolph August 15, 2006 Page 4 of 4 v) you become disabled and you become eligible to receive payments under Ashland's Long Term Disability Plan at any time thereafter; or vi) in the event of your death. Provided, however, that Ashland will not be relieved of any obligations under its employee benefits plans which arise due to your death. This Letter Agreement shall terminate on the earlier of i) your Stay Date or ii) the date on which an Early Termination occurs. Provided, however, that the confidentiality provisions of this Letter Agreement and any obligations on the part of Ashland arising under this Letter Agreement during its term, or triggered under this Letter Agreement on the date of its termination, shall survive the termination of this Letter Agreement. This Letter Agreement does not, in any way, constitute a contract or agreement guaranteeing your continued employment. Ashland reserves the right to terminate your employment at any time, with or without cause. If you agree with the foregoing, please sign and date each original of this Letter Agreement in the space provided for your signature and fax a copy of this executed agreement to me at (859) 815-3823 no later than the close of business on August 18, 2006. Please then return one signed original to me by regular mail that same day. You may retain the other enclosed original for your records. Should you have any questions, please feel free to contact me. Sincerely yours, /s/ Susan B. Esler ------------------------ Susan B. Esler Agreed to and accepted this 18 day of August, 2006. /s/ Robert K. Randolph ---------------------------- Robert K. Randolph cc: David L. Hausrath

                                                               EXHIBIT 99.1


                             [GRAPHIC OMITTED]

                          FOR ADDITIONAL INFORMATION:
                            Media Relations:           Investor Relations:
                            Jim Vitak                  Daragh Porter
                            (614) 790-3715             (859) 815-3825
                            jevitak@ashland.com        dlporter@ashland.com

                           FOR IMMEDIATE RELEASE
                            August 21, 2006

ASHLAND INC. TO SELL APAC
TO OLDCASTLE MATERIALS, INC., FOR $1.30 BILLION

COVINGTON,  Ky. - Ashland  Inc.  (NYSE:  ASH) today  announced  that it has
signed a  definitive  agreement  to sell  the  stock  of its  wholly  owned
subsidiary,  Ashland Paving And Construction,  Inc. ("APAC"),  to Oldcastle
Materials,  Inc.,  for $1.30  billion,  the final price to be adjusted  for
changes in working  capital and certain other accounts from Sept. 30, 2005,
until closing. After-tax proceeds,  pre-adjustment,  are estimated to total
$1.25 billion. The transaction,  which has received antitrust clearance, is
expected to close by the end of the month,  subject to the  satisfaction of
customary closing conditions.

     At the company's  September board meeting,  Ashland management intends
to recommend to its board of directors  that  substantially  all of the net
after-tax  proceeds from this transaction be used to fund the completion of
the existing share repurchase authorization, an additional share repurchase
authorization and a special cash dividend.  The aggregate share repurchases
under the existing  authorization  and, if approved,  the additional  share
repurchase  authorization  would be  limited  to  approximately  10 million
shares.  There can be no assurance  that the board of directors will accept
management's recommendation.

     "Today,  Ashland  sharpens  its focus on its  future as a  diversified
chemical  company,"  said James J.  O'Brien,  Ashland's  chairman and chief
executive officer. "When the transaction is completed, Ashland will consist
of its four chemical  divisions:  Ashland  Performance  Materials,  Ashland
Distribution, Valvoline and Ashland Water Technologies."

     Continuing,  Mr.  O'Brien said,  "While  Ashland has been pleased with
APAC's recent  performance,  the sale to Oldcastle is an important  step in
achieving  Ashland's strategic  objectives.  In addition to our recommended
use of proceeds, we continue to focus on creating

                                 - more -

Ashland Inc. - Covington, Ky. - 41012-0391 - (859) 815-3333 - www.ashland.com

Ashland Inc. to sell APAC to Oldcastle Materials for $1.30 billion, pg.2 long-term value for Ashland's shareholders. We have the financial flexibility to pursue organic growth and seek acquisitions that complement and strengthen our core chemical businesses." In connection with the transaction, Credit Suisse Securities (USA) LLC acted as financial advisor, and Cravath, Swaine & Moore LLP acted as legal counsel to Ashland. Today at 10 a.m., EDT, Ashland will conduct a conference call and audio webcast for securities analysts. The event will be accessible through Ashland's Investor Relations website, www.ashland.com/investors. Afterward, an archived version of the webcast will be available on the Ashland website for 12 months. Minimum requirements to listen to the webcast include the free Windows MediaPlayer software and a 28.8 Kbps connection to the Internet. With approximately 9,700 employees, APAC currently operates in 14 Southern and Midwestern states and has 93 aggregate production facilities, including 36 permanent operating quarry locations; 31 ready-mix concrete plants; 226 hot-mix asphalt plants and more than 13,000 pieces of mobile equipment. Ashland Inc. (NYSE: ASH) is a FORTUNE 500 chemical and transportation construction company providing products, services and customer solutions throughout the world. To learn more about Ashland, visit www.ashland.com. -0- FORTUNE 500 is a registered trademark of Time Inc. FORWARD-LOOKING STATEMENTS This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include those that refer to Ashland's operating performance and expectations about the APAC transaction, including those statements that refer to the expected benefits of the transaction and management's recommendation of anticipated use of proceeds and expected benefits to Ashland's shareholders. Although Ashland believes its expectations are based on reasonable assumptions, it cannot assure the expectations reflected herein will be achieved. The risks, uncertainties and assumptions include the possibility that Ashland will be unable to fully realize the benefits anticipated from the transaction, the possibility that the transaction may not close, and other risks that are described from time to time in the Securities and Exchange Commission (SEC) reports of Ashland. Other factors and risks affecting Ashland are contained in Ashland's Form 10-K, as amended, for the fiscal year ended Sept. 30, 2005, filed with the SEC and available on Ashland's Investor Relations website at www.ashland.com/investors or the SEC's website at www.sec.gov. Ashland undertakes no obligation to subsequently update or revise the forward-looking statements made in this news release to reflect events or circumstances after the date of this release.