March 27, 2007

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  • Food For Thought
  • Lyden Acquires Spartan Oil
  • ExxonMobil Increases PAO Production Capacity
  • Chemtura Announces Restructuring to Improve Performance, Accelerate Growth, Better Serve Customers

  • Food For Thought

    It seems not a day goes by where Jobbers World isn’t hearing something about a pending or completed merger or acquisition in the lubricants business. Sometimes these communications are about lubricant manufacturers and other times they are about distributors. They come in the form of rumors, unconfirmed “facts,” “have you heards?” and “heads ups” And from time-to-time we get the official word via e-mails and press releases announcing that a deal has been done.

    Scuttlebutt about mergers and acquisitions is always interesting, sometimes entertaining, occasionally old and stale, and in a surprisingly number of cases, spot on. So what do we do with the most recent rumor grinding through the mill? The one about a leading highway hospitality business with service centers and restaurants across the US, refining assets in the west and an extensive distribution network and presence throughout the country. Is it true that this well known company with a highly visible brand on many of the highways and byways of the US might acquire a very large fuel and lubricant jobber in the Silver State?

    Let’s for a moment say it is true. Let’s imagine such a deal does get done and a Lucite tombstone attesting to that fact is sitting in someone’s office nestled near the Wasatch Front on the west flank of the Rocky Mountains. If such a deal is consummated could it signal the start of the all to played out catch phrase, the infamous “paradigm shift” in how lubricants are distributed? Imagine that for a moment. A lubricant distributor acquired by a company that has the ability to produce base stocks, blend lubricants, and distributes them nationally under their own brand name at their own stores, with their own trucks.

    As I said, scuttlebutt about mergers and acquisitions is always interesting, sometimes entertaining, occasionally old and stale, and in a surprisingly number of cases, spot on. It will be interesting to see if the oddsmakers in Reno are right about this one.

    By Tom Glenn

    Lyden Acquires Spartan Oil

    Lyden Oil, a leading lubricant distributor in Ohio, announced that it has acquired Spartan Oil. Spartan Oil Corporation is Michigan’s premier distributor of lubricants and accessories for automotive, fleet, agricultural and industrial applications. Spartan houses one of the largest inventories in the Midwest. It’s inventory includes 700,000 gallons of bulk lubricants, and more than 2,000 drums. In addition, Spartan has 50,000 square feet of storage space. And if you think that’s impressive, consider that Lyden drums up close to 8 million gallons a of lubricant a year. When you put this together with Spartan’s roughly 6 million a year you get a very formidable player in Mid-west market.

    "The completion of this acquisition represents a significant step for Lyden in our strategy to accelerate growth by expanding geographically and managing our costs," said Paul Lyden, Vice President of Lyden Oil. Lyden continued: "We are now squarely focused on the attractive opportunities this transaction has created for us to drive growth as well as achieving significant cost synergies in transportation logistics, supply line management, and general and administrative expenses.”

    With the Spartan Oil acquisition now complete, Paul says “Lyden will have increased capacity to reach new customers and the ability to provide enhanced products and services.” Moreover, he continues, “This acquisition brings together two companies with 142 years of combined experience in the lubricants business.” Because of this, says Paul, the combined talent of our employees creates the most knowledgeable team of sales and service professionals in the industry.”

    Other winners in this deal appear to be CITGO, Shell, and ConocoPhillips. Unlike some of the other recent acquisitions in the lubricants business where there is clear indication of brand, and even channel conflicts, both Lyden and Spartan are aligned with similar suppliers, notes Jobbers World. As an example, both Lyden and Spartan are among CITGO’s top 15 suppliers (Lyden is reportedly ranked as CITGO’s fourth largest lubricant distributor). In addition, both companies handle an impressive volume of Shell and ConocoPhillips brands.

    Another advantage of this acquisition, says Paul Lyden, is that “both Lyden and Spartan share similar corporate cultures.” Both companies believe in excellent service and that customers value choice in brands.” Both Lyden and Spartan feel that long-standing relationships with major suppliers guarantees such choice and Paul Lyden says “Our strong supplier links also mean we can provide our customers with more for their dollar.”

    ExxonMobil Increases PAO Production Capacity

    ExxonMobil Chemical reported the completion several debottleneck projects at its Beaumont polyalphaolefins plant in order to increase the capacity to produce high viscosity SpectraSyn 40 cSt and SpectraSyn 100 cSt polyalphaolefins (PAO). Completion of this project increases its capacity to produce these grades of PAO by 15%.

    SpectraSyn high viscosity PAO products are typically used as blend components to increase basestock viscosity and to upgrade the quality of other base stock types used to produce lubricants.

    Chemtura Announces Restructuring to Improve Performance, Accelerate Growth, Better Serve Customers

    Chemtura Corporation announced that it is implementing an industry-based business model in order to improve performance and accelerate growth. By focusing on end-use markets, Chemtura believes it will be better able to serve current customer needs, anticipate their future requirements and target rapidly growing industry segments.

    By redirecting our commercial emphasis to the end-use priorities of our customers, Chemtura will better leverage the considerable technical and applications expertise that already defines its leadership positions in flame retardants, urethanes, lubricant additives, crop protection, recreational water purification and numerous additives used in the processing of polymers. Our commitment to industry specialization will improve existing customer-supplier partnership, and enhance our preparedness to meet rapidly changing industry demands in the future.

    The new organizational and reporting structure streamlines leadership and decision making while giving each business better accessibility to the tools they need to succeed and more direct accountability for results. Each business will have responsibility for its own production facilities, operational and financial forecasting, sourcing decisions, process excellence initiatives, and technical development efforts.

    Organizational streamlining is expected to result in a reduction of the company's global workforce by approximately 10 percent (620 positions), resulting in an annualized cost reduction of approximately $50 million beginning in 2008. The company expects to record charges related to the restructuring in the range of $25-$35 million.


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