(Reuters) - U.S. oil refiner HollyFrontier Corp said on Monday it would buy Suncor Energy Inc’s Petro-Canada lubricants unit for C$1.13 billion ($844 million), expanding its North American lubricants business.
HollyFrontier will become the fourth-largest lubricants producer in North America with a capacity of 28,000 barrels per day, or about 10 percent of North American production, the oil refiner said.
Petro-Canada is the world’s largest manufacturer of white mineral oil, which is used in health and beauty products, pharmaceuticals, adhesives, plastics and elastomers. It purchased its lubricants business from Gulf Canada in 1985.
Suncor, Canada’s biggest energy company, merged with Petro-Canada in 2009.
Reuters reported last week, citing sources, that HollyFrontier was in advanced talks to acquire Suncor’s Petro-Canada lubricants division for a little over $1 billion, after submitting the highest bid in an auction.
The deal, which includes working capital of about C$342 million, will immediately add to HollyFrontier’s earnings per share and cash flow, the company said.
HollyFrontier said it would fund the deal, expected to close in the first quarter of 2017, with a combination of debt and cash on hand.
Goldman Sachs & Co was the financial adviser to HollyFrontier.
Reporting by Anet Josline Pinto in Bengaluru; Editing by Shounak Dasgupta and Sriraj Kalluvila