Ashland Absorbs Oil Can Henrys


Ashland entered the quick lube space in several Pacific Northwest markets by snapping up the 89-site Oil Can Henrys chain.

The acquisition of the Portland, Oregon-based chain is expected to be completed in the first quarter of 2016. Financial terms were not disclosed.

Oil Can Henrys has a great brand, and has built its business over more than 30 years, Ashland spokesman Gary Rhodes said. Rhodes noted Ashland doesnt plan to change the Oil Can Henrys brand over to Valvoline Instant Oil Change without conducting research. We dont plan to make any changes to the brand without first conducting some in-market customer research to try to assess the value of the brand and the brand equity it has in consumers minds in those markets, Rhodes told Lube Report.

There are several similarities between the two businesses, including the way they approach customer service, and the way they approach marketing. Were looking forward to working together to build on that, he added.

We see significant opportunities to grow the Valvoline Instant Oil Change network, and we are increasing our investment to accelerate store count growth, both organically and through acquisitions, William Wulfsohn, chairman and CEO of Covington, Kentucky-based Ashland, said in a news release. The acquisition of Oil Can Henrys is consistent with this strategy, as it will provide high returns on invested capital, will increase our quick lube store count by nearly 10 percent and will expand our geographic footprint.

National Oil & Lube News annual Tops in the Industry Ranking survey ranked Oil Can Henrys as the 13th-largest fast lube chain in the U.S., as of Feb. 28. Valvoline Instant Oil Change ranked second in the survey, with 929 stores – 272 company-owned and 657 franchised – up 3 percent from a year earlier.

Founded in 1978, Oil Can Henrys employs 453 people and operates 47 company-owned stores and 42 franchise locations, including 38 sites in Oregon, 29 in Washington, 11 in California, five in Arizona, three in Idaho and three in Colorado.

The addition of Oil Can Henrys offers attractive growth opportunities for Valvoline in Oregon, Washington and select other markets as we accelerate the expansion of our store network, Sam Mitchell, Ashland senior vice president and Valvoline president, said in a news release.

Generally we have very little presence in the Pacific Northwest – so Washington, Oregon and Idaho would all be new markets for us through this acquisition, Rhodes said. Weve got a number in California already, and we have some in Colorado and Arizona as well. Largely the two biggest new markets would be Washington and Oregon.

George Morvey, industry manager for Parsippany, N.J.-based consultancy Kline & Co.s Energy Practice, said the acquisition will strengthen Valvolines position in the installed market segment of the U.S. consumer automotive lubricants business.

This has the potential to add a significant amount of branded passenger car motor oil to Valvolines market share, estimated at upwards of 650,000 to 700,000 gallons annually, Morvey told Lube Report. Its quite possible that given the location of these facilities, Valvoline may also enjoy some new demand for its NextGen recycled engine oil. The U.S. consumer automotive lubricants business volumetrically is expected to be flat over the next 5 years. However we are seeing good growth opportunities in synthetics and high-mileage products, driven by OEM technical demand on new vehicles and longer service life of vehicles outside of warranty. Moreover, the quick lube segment will continue to be the top destination for vehicle owners to have routine maintenance and service, followed by new car dealer service departments, which plays to Valvolines strength.

According to its website, the quick lubes in the Oil Can Henrys chain have primarily used Castrol products, and also at some locations offered Universal Lubricants Eco Ultra synthetic blend motor oil, which is made with rerefined base oil. Rhodes confirmed that once the acquisition by Ashland is official, all the OCH locations would switch to Valvoline products.

The quick lube chain also touts a proprietary CastrolCam video monitor system, introduced in 2001, which provides live views of its employees at work under the hood and under the vehicle. The customer watches the video monitor positioned next to the driver side window as serviced is performed.

Ashland announced in September it will spin off Valvoline, saying the lubricants business is positioned for growth in quick lube and international markets.

The plan also calls for Valvoline to become an independent publicly owned company and for creation of a separate, new Ashland specialty chemicals company that would also be independent and publicly traded. Subject to final approval by Ashlands board and regulators, the change is expected to take at least a year to complete.