Wednesday, November 7, 2012

Gulf Oil Corp drops after announcing large US acquisition

Gulf Oil Corporation (GOCL) today, 7 November 2012, said that the company through its subsidiary in the United Kingdom is acquiring 100% stake in Houghton International Inc. for $1.045 billion, subject to customary closing conditions. The company said an agreement was signed for the acquisition by its wholly owned subsidiary in the UK on Tuesday, 6 November, 2012, with the seller which is a US-based private equity fund. Houghton has a global footprint, with sales in more than 75 countries, which are supported by 12 manufacturing facilities in 10 countries. Houghton recorded, on a twelve month basis ending September 2012, sales of $858 million and adjusted EBITDA of $132 million.

GOCL's statement does not mention how the company intends to finance the large acquisition. GOCL said the acquisition fits extremely well with its lubricant portfolio. Houghton has a very strong industrial portfolio, which perfectly complements GOCL's very strong presence in the automotive lubricant sector, GOCL said in a statement. GOCL will operate Houghton as a separate company and the rest of GOCL's operations will be able to leverage Houghton's extensive base of industrial customers to offer them a complete end-to-end range of lubricants and, in addition, there are various synergies that can be achieved in manufacturing, strategic sourcing and distribution, GOCL said.

Founded in 1865, Houghton is the most recognized brand in metal working fluids (MWF), especially in the North American and European markets, GOCL said. Houghton possesses the industry's broadest offering in the MWF segment and related specialty chemicals. It has an extensive library of high performance, proprietary chemical formulations, which are highly technical and are customized to meet specific segments' needs, GOCL said. MWFs are mission-critical specialty chemicals, used for a variety of metal processing applications including metal cutting and removal, metal forming, drawing and stamping, heat treatment and quenching, corrosion prevention and hydraulic systems. Houghton has a diversified customer base in global end-markets such as automotive, fabricated metal goods, aluminium, steel, energy and aerospace. Houghton's management team is highly committed, with extensive experience in the segment, which is one of the key reasons why Houghton has delivered consistent growth and an improvement in returns, GOCL said.

GOCL's net profit fell 33.1% to Rs 10.07 crore on 12.1% growth in net sales to Rs 247.58 crore in Q1 June 2012 over Q1 June 2011.

Hinduja Group firm Gulf Oil Corporation makes lubricant oil for application in automotive, agricultural, industrial, construction and marine segments. The company markets its product under the Gulf brand.

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