Clean Harbors will pay $140 million in cash to acquire Vertex Energy’s Heartland base oil rerefinery in Ohio, a second rerefinery in Louisiana and its used oil collections businesses, the two companies announced yesterday. The acquisition is expected to close in the third quarter, subject to approvals and conditions.
Acquired by Houston-based Vertex in 2014, the Heartland rerefinery in Columbus has capacity to make 55,000 metric tons per year of API Group II base oils and can process up to 20 million gallons per year of waste oil. Clean Harbors, based in Norwell, Massachusetts, will also acquire a rerefinery in Marrero, Louisiana, that can process up to 69 million g/y of waste oil and produces vacuum gas oil.
The deal includes Vertex’s H&H and Heartland used oil collections business and 17 service branches throughout the Midwest and U.S. Gulf Coast region, supported by about 200 employees and a fleet of collection vehicles. Other assets that will be acquired include the Cedar Marine terminal in Baytown, Texas, and the Nickco oil filters and absorbent materials recycling facility in East Texas.
“This transaction positions Vertex to redeploy capital from used motor oil and rerefining assets into energy transition assets of scale,” Vertex President and CEO Benjamin Cowart said in a news release.
Clean Harbors, parent company of Safety-Kleen, has five base oil rerefineries in the United States and one in Canada. “Expanding our rerefining network through the addition of the Vertex assets, which include our first rerefining operation in the Gulf Coast region, will enable us to further grow our presence in the renewable lubricants and fuel markets,” Clean Harbors Chairman and CEO Alan McKim said in a news release. “Vertex’s waste oil collection and branch footprint complements our existing network of locations and expands our service capabilities within a number of key states.”
McKim said the company looked forward to welcoming Vertex Energy employees to the Clean Harbors family later this year. The company noted the transaction will enable it to add an experienced team of employees and operations across seven states and will generate cross-selling opportunities with its environmental services segment.
“As customers continue to look for greener solutions to reduce their impact on the environment, we believe that our closed-loop programs for collecting waste oil and producing finished lubricants or recycled fuels will become even more attractive in the coming quarters and years ahead,” McKim said. “The Vertex assets will support the growth strategies related to these sustainable offerings.”
Steve Ames of SBA Consulting in Pepper Pike, Ohio, noted that in the Midwest, Clean Harbors already has a major rerefining operation in East Chicago, Illinois, which includes a lubricants blending plant. “The Columbus plant, although modern – built by Heartland Petroleum in 2009 – had safety and environmental problems and a fire during its initial years and was taken over by first Warren Distribution and in 2014 by Vertex,” Ames said. “It was not a major margin generator for any of the owners.”
He suggested that the value of the deal probably lies in Vertex’s extensive waste oil collection, where most of the margin is derived. “And it’s from the waste oil collection business that an entity would forward integrate into rerefining,” he noted.
Ames added that, financially, it also frees Vertex to pursue its renewable fuels venture with the recent agreement to purchase Shell’s refinery in Mobile, Alabama.
On May 26, Vertex announced an agreement to acquire the Mobile refinery and related logistics assets for $75 million from Equilon Enterprises – which does business as Shell Oil Products U.S. – Shell Oil Co. and Shell Chemical LP, subsidiaries of Royal Dutch Shell. At the time, Vertex noted that the refinery has the option to run as a stand-alone refinery and is also capable of producing base oils and chemicals feedstock.
In early 2016, Clean Harbors acquired Vertex’s rerefinery in Fallon, Nevada, for $35 million to boost plans to increase its rerefining presence in California and other West Coast lubricant markets. Vertex had rented the Bango rerefinery from Bango Oil since May 2015 under a lease that allowed it to purchase the facility at any time. In its February 2016 announcement of the deal, Vertex said it had used $14 million that it received at closing to execute its purchase agreement with Bango Oil and then convey the facility to Safety-Kleen. The plant has capacity to make 70,000 t/y of Group II stocks.
In August 2014 Vertex announced plans to acquire Heartland Group Holdings – including its rerefinery in Columbus and its used oil collection operations in the Midwest – for $16.5 million. Heartland Group at the time was primarily owned by Warren Distribution, based in Omaha, Nebraska.
In 2014, Vertex also agreed to acquire several key assets of Omega Holdings Company LLC, including its Marrero-based VGO rerefinery.