Repsol announced Monday an agreement to acquire 40 percent of lubricant distributor Bardahl de Mexico, which will enable the Spanish energy company to manufacture and sell its own lubricants in Mexico. Terms of the agreement – expected to close in 2018s third quarter – were not disclosed.
The deal is part of a broader plan for Madrid-based Repsol to double its current lubricants sales volume of 150,000 metric tons per year by 2021, primarily through overseas expansion. Officials said the company has a 100 million budget for acquisition of blending plants in other countries such as China, India and Indonesia and aims to have international sales account for 70 percent of lube volumes in three years, compared to the current portion of 45 percent.
The stake in Bardahl de Mexico, which is a distributor of Seattle-based lube marketer Bardahl Corp., is Repsols largest-ever purchase in the lubricants industry and will make Mexico its main lubricants market in Latin America. This agreement with Bardahl will significantly accelerate our plan, Repsol spokeswoman Beatriz Tobio told Lube Report in an email.
Bardahl de Mexico will manufacture Repsol-branded lubricants in its lone factory in Toluca, Mexico and sell those lubricants using its sales channels in Mexico. Repsol cited Bardahl de Mexicos six percent share of the Mexican lubricants market and its sales and distribution network as key reasons for the agreement. Repsols objective is to increase its market share in the country to somewhere between 8 and 10 percent.
Repsol plans to invest around 400 million (U.S. $467 million) to open 200 to 250 service stations per year in Mexico through 2022, expanding on the 60 service stations the company already operates in the country.
Bardahl de Mexico has rights to manufacture and sell Bardahl Corp.s products in Mexico.
Repsol declined to clarify the new joint ventures strategy for managing both the Bardahl and Repsol lube brands beyond stating that it considers them complementary.
The agreement marks Repsols continued efforts to expand its international footprint. The company aims to increase its lubricants sales volume to 300 million tons in approximately two and a half years.
Repsol said it plans to purchase 100 million worth of stakes in lubricant plants internationally. It listed Latin America and Asia – in particular China, Indonesia and India – as potential areas to invest in. The company confirmed it is already looking at other investment opportunities.
Repsols strategic plan to growth in the lubricant business rests on three pillars, Tobio said. First, the inorganic growth, with acquisitions such as the Bardahl acquisition. Second, we want to increase the number of distributors we have – currently we have 70 international agreements. Finally, the increase of the manufacturing license agreements. This plan will allow us to double our volume in this period.
Mexico ranks second in Latin America – exceeded only by Brazil – and ninth globally in annual lubricant sales volume at 725 million tons, according to Repsol. Mexico is a market with great potential, Tobio said.
In addition to the Toluca, Mexico plant, Repsol owns a lubricant plant at its refinery in Puertollano, Spain, along with 11 manufacturing and distribution license agreements in countries such as Brazil, China, Japan, Indonesia, India and Malaysia.