Moove to Acquire PetroChoice


Moove to Acquire PetroChoice
Moove, the lubricants arm of Sao Paulo, Brazil-based Cosan, acquired PetroChoice, the largest lubricants distributor in the United States, for $479 million from private equity investment firm Golden Gate Capital. © Africa Studio

Cosan’s Moove made a splash this week with an almost half-billion-dollar acquisition for PetroChoice, the largest lubricants distributor in the United States, part of the company’s plan to accelerate its growth and expand as a global lubes player.

Moove, the lubricants arm of Sao Paulo-based Cosan, acquired the distributor for $479 million from private equity investment firm Golden Gate Capital, the company announced.

PetroChoice distributes approximately 62 million gallons of lubricants annually in the industrial, commercial and passenger vehicle segments, carrying brands like Mobil and Shell.

Moove saw its net income and net revenue increase 119% and 21%, respectively, in the first quarter of this year compared to the same period in 2021 and has posted other record-high quarters in the past couple of years. According to Reuters, the acquisition will boost Moove’s annual revenue by 50%, to approximately 9 billion reais (U.S. $1.87 billion).

The company views the PetroChoice deal as a large step toward fulfilling its ambitious expansion goals.

“The U.S. market is the second-largest in the world, almost six times larger than the Brazilian market,” Moove CEO Filipe Affonso Ferreira told Lube Report. “This is an important step for our global growth plans, and this acquisition helps Moove establish a leadership position in the large and growing U.S. lubricants market.

“The acquisition makes Moove a relevant lubricant player with a robust portfolio and strong presence in the regions defined [in our] strategic plan – Americas and Europe.”

Moove has been busy making acquisitions the past few years. The company now owns two European distributors – Portugal’s Lubrigrupo and France’s TTA Lubrifiants – and a New York-based distributor in Metrolube. It was already an established distributor of ExxonMobil in several South American countries.

Tom Glenn, president of consulting firm Petroleum Trends International, the Petroleum Quality Institute of America, and Jobbers World newsletter, said this kind of acquisition is not common.

“It’s a big deal because it’s a big company and a big distributor, backed by a private equity firm,” he told Lube Report. “The ongoing question has always been, what’s the endgame for these private equity investments in lubricant distribution?”

Glenn said looming debt payments posed a daunting challenge for PetroChoice. According to Bloomberg Law, the company faces an August deadline to pay more than $300 million. “I suspect that may have prompted [Golden Gate Capital] to shop the company.”

It has been relatively unusual for finished lubricant producers and marketers to buy into distribution businesses. As Glenn noted, it has been more common – especially in the United States – for private equity firms to make such acquisitions.

“The Moove acquisition of PetroChoice sheds light on a question many in the lubricants industry have been asking for quite some time,” he said. “What’s the exit strategy for private equity firms that invest in lubricant distribution?”

Traditionally, he said, there are three paths for private equity to exit investments: trade sales, secondary buyouts and public stock offerings.

“What we primarily have seen to date are secondary buyouts, where one private equity firm buys the portfolio company of another,” he said. “An example of this was recently seen when American Industrial Partners acquired RelaDyne from Audax Private Equity. But, where secondary buyouts provide an exit for one private equity firm, it begs the question as to the exit strategy for the next financial investor. With that, many still wonder what the ultimate endgame is for private equity in the lubricant distribution space.”

Although private equity firm CVC Capital owns a 30% stake in Moove, Glenn said, Cosan owns the balance and is solidly in the lubricants business.

“Because of this, the Moove acquisition of PetroChoice looks more like a trade sale than a secondary buyout,” he said. “Further, it’s a trade sale, where there appears to be strong upside potential due to the synergies of the two companies in terms of the ExxonMobil brand, business activity in sustainable lubricants, go to market strategies, and others.”   

On the topic of further expansion, Ferreira said that Moove is “constantly looking at the market.”

He also said PetroChoice will continue to distribute the lubricants it currently distributes.

Glenn called the acquisition a good opportunity for Moove. “It’s an opportunity for an outsider to come in and operate as an outsider inside the U.S. with an existing infrastructure that knows how to do business and excel in the U.S. Just on that alone it’s a good move from Moove,” he said.

Cosan, a producer of sugar and ethanol products since 1936, expanded through acquisitions beginning in 2008 to become a distributor of fuels and lubricants. Moove produces and distributes products under the Mobil and Comma brands, with operations in Brazil and other countries in South America, Europe and the United States. It also imports and distributes base oils in the Brazilian market.