VeroLube – based in Alberta, Canada, and Houston, Texas – announced Monday that it will acquire Scottsdale, Arizona-based used oil collector Thermo Fluids Inc. for around $175 million. VeroLube also unveiled plans to build up to four facilities in North America by early- to mid-2015, including at least three rerefineries.
The deal, consisting of $165 million in cash and $10 million in VeroLube common stock, is expected to close in the second quarter of this year.
Thermo Fluids parent company, Nuverra Environmental – formerly Heckmann Corp. –
acquired the stand-alone oil recycling and waste treatment company in March 2012 for $245 million.
The acquisition will allow VeroLube to control a supply of feedstock, Director of Business Development Ted Rea told Lube Report. With Thermo Fluids, well have flow of around 50 million gallons of used motor oil per year.
Thermo Fluids collection network includes quick lubes, auto dealerships, mining operations and industrial operations. Clients include Walmart, Penske, Jiffy Lube, Halliburton, Peabody Energy and ConocoPhillips. It also collects and converts oily wastewater, antifreeze and used oil filters. The company recycles the collected material into fuel oil using a proprietary process.
The acquisition is part of VeroLubes larger growth project, funded in part by investment partner Canaccord Genuity Corp. The partnership includes plans for construction of rerefineries on the Gulf Coast and East Coast of the United States, along with ambitious plans for additional acquisitions of used oil collection companies, according to Rea.
While VeroLube currently does not operate a commercial rerefinery, the company announced last November that it planned to start building rerefineries in Alberta, Canada, and in Houston, as early as late 2014.
With a pilot plant south of Dallas to test its proprietary ReGen process of rerefining waste oil into API Group II and III base oil, the company is deep in the design phase, Rea said. Were moving from five barrels per day to 2,000 to 4,000 barrels per day by September.
VeroLube plans to retain Thermo Fluids Scottsdale headquarters, Rea said. Rea and Chief Financial Officer Bruce Hall told Lube Report that the company also has its eyes on sites in the U.S. Southwest, such as Arizona or Nevada, for a fourth facility closer to Thermo Fluids. The company said it has not yet determined if that would be a rerefinery, distribution hub or other type of facility.
VeroLube also announced the hiring of Ken Cherry as its new chief executive officer. Cherry was formerly executive vice president and general manager of FCC Environmental, which collects used motor oil. FCC Environmental is expected to break ground in the second quarter of this year on a 2,000 b/d Group II base oil rerefinery in Baltimore, Md.
Former VeroLube CEO Leslie Wulf is remaining with the company as founder and director, and will focus on the companys opportunities globally.