Officials for Council Bluffs, Iowa-based Red Giant said it will operate as a separate division within HollyFrontiers lubricant business and that they expect the business to continue growing.
Weve wanted to make in-roads into the Eastern United States, and we expect that being part of HollyFrontier will allow us to do that and to expand into Canada as well, Red Giant President Sherryl Bills-Taylor said in a phone interview.
The sale was precipitated by Bills-Taylors decision to retire. She said her company had looked for a buyer since late last year. The companies did not disclose the price of the deal, which is subject to customary closing conditions and expected to be completed during the third quarter.
Dallas-based HollyFrontier is an independent refiner and marketer of fuels and other oil products, including finished lubricants. It operates several refineries and two base oil plants - a 9,500 barrel per day API Group I plant in Tulsa, Oklahoma, and a 15,600 b/y Group II and III Petro-Canada plant in Mississauga, Ontario.
This transaction demonstrates the continued growth of our lubricant business and brings outstanding value to HollyFrontier, HollyFrontier CEO and President George Damiris said in a press release. The company said it expects Red Giant to generate $7.5 million in annual earnings before interest, taxes, depreciation and amortization.
Red Giant reports selling approximately 81,000 metric tons of lubricants per year, mostly engine oils for train locomotives. It is sole supplier of those lubes to the BNSF Railway and the Kansas City Southern and is a major supplier to Union Pacific.
The company operates blending plants in Council Bluffs and Joshua, Texas, and has storage facilities in Pittsburgh, Kansas; Downey, Idaho; and Newcastle, Wyoming.
Red Giant has been in business since 1910. It was purchased by Bills-Taylors father, Fred J. Galvani, in 1959. He ran the company until his death in 2005 and was succeeded by Bills-Taylors late husband, Gary L. Bills, who died a few months later. At that time, Bills-Taylor was a retired teacher and homemaker.
My mother [Lorraine Galvani] asked me if I would run the company, Bills-Taylor said. I said Id give it a try. In the past 13 years Red Giant has doubled in size, she said. It has approximately 50 employees who will be absorbed by HollyFrontier. HollyFrontier will keep the Red Giant brand but plans to eliminate the companys other brand, Searle.