Mergers & Acquisitions

HollyFrontier to acquire Red Giant Oil, North America’s largest locomotive engine oil supplier

HollyFrontier to acquire Red Giant Oil, North America’s largest locomotive engine oil supplier

HollyFrontier Corporation announced that it has entered into a definitive agreement to acquire Red Giant Oil Company, a family-owned lubricants company based in Council Bluffs, Iowa, U.S.A.

Financial details of the transaction were not disclosed. But HollyFrontier said it expects to generate approximately USD 7.5 million in annual forecasted EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) following the acquisition of Red Giant Oil.

Red Giant Oil produces 24 million gallons of diesel engine oil annually. The company has storage facilities in Idaho, Utah and Wyoming, along with a lubricant blending and packaging facility in Texas.

The purchase agreement would keep the 50-employee business as a separate entity within HollyFrontier’s lubrication division. That was a key factor in agreeing to sell to HollyFrontier, said Red Giant Oil President Sherryl G. Bills-Taylor.

The Red Giant name would continue, but a secondary brand, Searle Petroleum Products, would be discontinued.

Pat Carrigan, currently Red Giant Oil vice president for business development and operations, would take over management of the company after Bills-Taylor retires, following a transition period.

Red Giant Oil began doing business in 1910 selling oil and other products to farmers and farm equipment dealers in the Midwest. The name was later changed to E-Z Manufacturing Company and incorporated in the year 1946. Two years later, the company name was changed to Red Giant Oil Company.

Fred J. Galvani, who had been a salesman for the company, purchased Red Giant Oil Company in 1959. Five years later, he purchased Searle Petroleum Company from the Harry Searle family, which had owned and operated that lubrication business since 1889. Galvani worked at Red Giant Oil until his death in 2004.

In the mid-1980’s, Red Giant Oil/Searle Petroleum Company began selling new railroad engine oils to two Class 1 railroads. Today, the company is the largest supplier of locomotive engine oils in North America.

“We are pleased to announce the acquisition of Red Giant Oil, with its outstanding history and brand in the railroad lubricant industry. This transaction demonstrates the continued growth of our lubricant business and brings outstanding value to HollyFrontier,” said George Damiris, president and CEO of HollyFrontier.

The transaction is subject to customary closing conditions and is expected to close in the third quarter of 2018.

HollyFrontier, which was represented by Morgan Lewis & Bockius LLP in this transaction, is headquartered in Dallas, Texas, U.S.A. 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.

Through its subsidiaries, HollyFrontier operates a 135,000 barrels per stream day (bpsd) refinery located in El Dorado, Kan., U.S.A., a 125,000 bpsd refinery in Tulsa, Okla., U.S.A., a 100,000 bpsd refinery located in Artesia, N.M., U.S.A., a 52,000 bpsd refinery located in Cheyenne, Wyo., U.S.A., and a 45,000 bpsd refinery in Woods Cross, Utah, U.S.A.

HollyFrontier markets its refined products in the United States, principally in the Southwest, the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. In addition, HollyFrontier, through its subsidiary, owns Petro-Canada Lubricants Inc., whose Mississauga, Ontario, Canada, lube refinery produces 15,600 barrels per day of base oils.  Petro-Canada also produces and sells fully formulated lubricant products. In addition, HollyFrontier owns a 57% interest and a non-economic general partner interest in Holly Energy Partners, L.P.

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