Mergers & Acquisitions

Spain’s Repsol acquires 40% of Mexico’s Bardahl to expand its lubricants footprint in Latin America

Spain’s Repsol acquires 40% of Mexico’s Bardahl to expand its lubricants footprint in Latin America
María Victoria Zingoni, Repsol’s executive managing director of downstream; Lucas Angelini, Repsol’s director of lubricants, asphalts, and specialized products; Sergio Díaz Torres and Sergio Díaz Gómez, owners of Bardahl. Photo courtesy of Repsol.

Spain’s integrated energy company Repsol has reached an agreement to acquire 40% of the Mexican automotive fluids and lubricants company Bardahl. This is the largest transaction to date for Repsol’s Lubricants unit, the company’s most global business unit, whose internationalization strategy will be significantly bolstered by this acquisition.

The alliance will allow Repsol to manufacture and sell its lubricants in Mexico through Bardahl, a company with extensive experience and which operates one of Latin America’s most modern lubricants blending plant, located in Toluca.

Bardahl has a 6% market share in Mexico and sells its products through its own network—the country’s broadest—consisting of 40 branches with more than 700 sales representatives and 10 exclusive distributors. The partnership with Repsol guarantees growth and value creation, driven by the Spanish company’s knowledge, experience and technological capacity.

With this transaction, Mexico will become one of Repsol’s main lubricants market, including the establishment of a lubricants blending plant in Latin America. This investment is supported by the company’s plan to open service stations across Mexico. Repsol plans to invest about EUR 400 million (USD 468.5 million) to open between 200 and 250 service stations per year in Mexico through 2022, with an aim to achieve a market share of between 8% and 10%. Repsol’s current network already includes 60 service stations in nine states: Mexico City, the State of Mexico, Veracruz, Baja California Sur, Jalisco, Oaxaca, Puebla, Hidalgo and Tlaxcala.

Mexico is a market with great growth potential, a booming economy, a population of more than 120 million people, and a fleet of 41 million vehicles with a high renewal rate. Mexico is currently second in Latin America and ninth in the world in terms of lubricants sales volume (725,000 metric tons per year, surpassed only by Brazil).

The transaction will create a joint venture—60% Bardahl, 40% Repsol—and is expected to be completed in the third quarter of 2018, once the necessary regulatory approvals have been obtained.

The new joint enterprise will sell Bardahl- and Repsol-branded lubricants in Mexico, given the complementarity of the two companies in terms of both positioning and distribution channels.

The purchase of 40% of Bardahl is part of the growth plan of Repsol’s Lubricants business unit, which aims to double its sales volume to reach 300,000 metric tons by 2021, 70% of them from its international business. Currently, Spain represents approximately 55% of Repsol’s lubricants sales, while its international business accounts for only 45%.

To achieve this objective, it will invest up to EUR 100 million (USD 117.1 million) to acquire stakes in lubricant companies, particularly in Latin America and Asia, in countries such as China, Indonesia and India.

The Lubricants business unit is Repsol’s most international, with a presence in 80 countries and more than 70 distribution contracts, 11 manufacturing license agreements (covering the main areas of global growth, such as Brazil, China, Japan, India, Indonesia and Malaysia), and eight commercial offices.

The transaction is in line with Repsol’s Strategic Plan, which aims to invest EUR 15 billion (USD 17.5 billion) through 2020. Of this investment, a total of EUR 4 billion (USD 4.7 billion) will be allocated to new initiatives, especially in the Downstream unit, both for the expansion of the petrochemicals, service stations, lubricants and trading businesses (EUR 1.5 billion) and for low carbon emissions projects (EUR 2.5 billion).

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