CALGARY – Suncor Energy (TSX:SU) will sell the Petro-Canada lubricants business for $1.125 billion to HollyFrontier Corp. of Dallas under a proposed deal announced Monday by the two companies.
Calgary-based Suncor said it plans to sell a manufacturing, research and sales centre in Mississauga, west of Toronto, that supplies a broad spectrum of motor oils and fluids as well as specialty lubricants and high-purity oils sold around the world.
HollyFrontier would also acquire a global sales operation with offices in Canada, the United States, Europe and China.
“This is a unique opportunity to acquire a state-of-the-art lubricant manufacturing facility and research and development centre,” HollyFrontier’s president and CEO, George Damiris, told analysts in a conference call.
Petro-Canada Lubricants Inc. produces base oils that are used in a wide variety of products including engine oil, transmission fluid, specialty oils for the manufacturing and resource sectors and oils used in health and beauty products. Such specialty lubricants generate higher margins than fuels, Damiris said.
Suncor has said that it aimed to sell between $1 billion and $1.5 billion of assets by the middle of next year. It previously announced the sale of a 49 per cent stake in a storage tank farm in Alberta for about $500 million.
“Today’s announcement is another example of how Suncor is focusing on its core assets through strategic acquisitions and divestitures that reinforce our commitment to long-term profitable growth,” Suncor president and CEO Steve Williams said in a brief statement Monday.