Further our story two weeks ago appearing in the October 24, 2016 issue of the OEM/Lube News, "HollyFrontier Reportedly in Lead to Acquire Petro-Canada Lubricants" HollyFrontier Corporation last Monday announced it has entered into a definitive agreement to acquire Suncor Energy’s Petro-Canada Lubricants business for CAD $1.125 billion (or approximately $845 million based on the exchange rate at time of signing), including working capital with an estimated value of CAD $342 million (or approximately $257 million based on the exchange rate at the time of signing). HollyFrontier expects to fund the transaction with a combination of debt and cash on hand, and anticipates the acquisition will be immediately accretive to the Company’s earnings per share and cash flow.

The assets acquired include:
•15,600 barrel per day lubricants (base oils) production capacity located in Mississauga, Ontario
•Dual train production facility with Hydrotreating and Catalytic Dewaxing Units
•Differentiated lubricants product portfolio
•Base Oil (Group II/II+, III/III+), White Oils, Specialty Products and Finished lubricants
•Downstream integrated into finished/packaged lubes and specialties
•3 inline blenders and multi-step batch blending operation
•Packaging capabilities range from 1 liter to bulk containers
•4 warehouses
•21 third party-operated terminals worldwide

Petro-Canada Lubricants' Mississauga, Ontario plant is the largest producer of base oils in Canada with 15,600 barrels per day of lubricant production capacity, and is the only North American producer of high margin Group III base oils. The facility is downstream integrated from base oils to finished lubricants and produces a broad spectrum of specialty lubricants and white oils which are distributed to end customers worldwide. With this transaction, HollyFrontier also acquires a perpetual exclusive license to use the Petro-Canada trademark in association with Lubricants.

With the addition of the Petro-Canada Lubricants business, HollyFrontier will become the fourth largest lubricants producer in North America, after Chevron, ExxonMobil and Motiva, with a capacity of 28,000 barrels per day, or approximately 10% of North American production. Petro-Canada Lubricants has generated approximately $150 million of EBITDA over the 12 month period ended June, 2016.

George Damiris, President and CEO commented, “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. 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. 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.” Damiris said, “Our vision is basically to double the size of our company by the year 2020, plain and simple.” The acquisition of Petro-Canada Lubricants has doubled HollyFrontier’s lubricants business.

Damiris noted the company’s previous plan for a phase two expansion at its Woods Cross refinery that would enable production of Group III base oil is put on hold indefinitely.

Petro-Canada’s finished lubricant brands include Duron, Supreme, Hydrex, Turboflo, Vultrex, Enduratex, Purity FG and Paraflex HT. Petro-Canada is also well known as the world’s largest white oil manufacturer. Its brands include Puretol, Purity and Kyrstol.

The transaction is subject to regulatory approval and customary closing conditions and is expected to close in the first quarter of 2017.

HollyFrontier Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel, jet fuel and other specialty products. HollyFrontier operates through its subsidiaries a 135,000 barrels per stream day ("bpsd") refinery located in El Dorado, Kansas, a 125,000 bpsd refinery in Tulsa, Oklahoma, a 100,000 bpsd refinery located in Artesia, New Mexico, a 52,000 bpsd refinery located in Cheyenne, Wyoming and a 45,000 bpsd refinery in Woods Cross, Utah. HollyFrontier markets its refined products principally in the Southwest U.S., the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. HollyFrontier and certain of its subsidiaries also currently own a 37% interest (including a 2% general partner interest) in Holly Energy Partners, L.P.