Streicher Mobile Fueling Inc. announced last week that it has agreed to buy H&W Petroleum Co., a large lubricant distributor based in Houston, for approximately $6.3 million. The deal is the second lube-related acquisition this year for Streicher, which sees the industry as a springboard for growth.
We believe there is an extraordinary growth opportunity in the lubricants industry, Chairman and Chief Executive Officer Richard E. Gathright told Lube Report. Margins in lubricants are better than fuels. We just think its a business that is ripe for consolidation and a good business to be in.
Streicher is based in Ft. Lauderdale, Fla., and provides mobile and bulk fueling and fuel management services for vehicle and equipment fleets in nine states, mostly in the Southeast and Mid-Atlantic regions. The company entered the lubes distribution business in February with the acquisition of another Houston-based company, Shank Services.
But whereas fueling and related services constitute the biggest part of Shanks operations, H&W is devoted to lubricants. In fact, it claims to be one of the nations largest distributors of both ExxonMobil and Texaco-branded lubes, with annual revenues of more than $51 million.
Streicher also acquired Harkrider Distributing Co., a small Houston-based supplier of solvents and specialty petroleum products to dry cleaners and industrial customers, which H&W had agreed to acquire immediately before the transaction with Streicher. The price tag of $6.3 million included both H&Ws and Harkriders assets.
Streicher said both H&W and Harkrider will retain their identities and that H&W head E. W. Wayne Wetzel has reached a long-term agreement to stay on as president and chief operating officer.
H&W serves over 3,800 customers, primarily companies requiring large volumes of specialty industrial oils, motor and gear lubricants, and greases. Gathright said H&Ws growth potential stems largely from the fact that it has a strong reputation and serves niche markets.
Streicher expects the H&W acquisition to close this month. To help pay for it and to provide other working capital, the company made arrangements for a $3 million private debt placement.