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* To use proceeds to fund $1.35 bln share buyback program
* Shares up 2.3 pct in early trading
Feb 18 (Reuters) - U.S. chemical manufacturer Ashland Inc , which is under pressure from activist investor Jana Partners, said it would sell its water technologies unit to a fund managed by Clayton, Dubilier & Rice for about $1.8 billion.
Ashland shares rose 2.3 percent to $98.40 in early trading.
The Valvoline motor oil maker said it would use the net proceeds of $1.4 billion to fund a $1.35 billion share buyback program also announced on Tuesday.
Ashland and other large U.S. chemical companies, including DuPont and Dow Chemical Co, are facing investor pressure to increase shareholder value by exiting cyclical businesses and focusing on units that generate higher margins.
"This divestiture allows us to focus on our core specialty chemicals business and to accelerate return of capital to shareholders ... ," said Ashland's Chief Executive James O'Brien said in a statement.
Reuters reported last November that Ashland was in talks with at least seven private equity firms for its water technologies unit.
Ashland's water treatment business supplies chemicals to industries such as pulp, paper and mining.
The unit, which generates annual sales of $1.7 billion and employs about 3,000 people worldwide, also makes biocides, coagulants and wood adhesives.
Ashland said the repurchase program replaces its previous $600 million buyback program and will expire at the end of 2015.
The deal is expected to close by the end of Ashland's fiscal year ending Sept. 30.