DALLAS—HollyFrontier Corp. has agreed to acquire Suncor Energy's Petro-Canada Lubricants business for about $845 million.
Petro-Canada Lubricants is one of the largest producers of base oils in Canada, with 15,600 barrels per day of lubricant production capacity from its site in Mississauga, Ontario. HollyFrontier said it is the only North American producer of high margin Group III base oils.
The firm added that the acquisition will bring it leading product innovation, research and development capabilities, a global sales and distribution network, and strong brand portfolio. HollyFrontier also acquires a perpetual exclusive license to use the Petro-Canada trademark in association with Lubricants.
The transaction is projected to close in the first quarter of 2017, subject to regulatory approval and customary closing conditions. If approved, HollyFrontier said it will become the fourth largest lubricants producer in North America with capacity for 28,000 barrels per day. It said in an Oct. 31 news release it would hold a 10 percent share of the North American market's production.
“This transformative acquisition will diversify HollyFrontier with the addition of a differentiated high margin business with more stable cash flows. Petro-Canada Lubricants is a great business, which combined with our existing Tulsa Lubricants business creates scale and will create a strong platform for growth,” George Damiris, HollyFrontier president and CEO, said in a statement.
“We look forward to realizing the operational and financial benefits of this combination to further strengthen our company and drive continued value creation for HollyFrontier,” he added. “We believe that the transaction will be of benefit to our stockholders, our current and new employees and Canada, especially as we expand the domestic and international reach of PCLI.”
Headquartered in Dallas, HollyFrontier is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel, jet fuel and other specialty products.