An industry acquiring

Whilst many businesses in the UK have focused on staying afloat over the past 18 months, some have been riding the acquisition wave, moving from strength to strength and growing with new businesses under their belts.In this feature article from the August issue of Fuel Oil News we take a closer look at some of the most recent mergers and acquisitions within the sector from the perspectives of both the buyers and the sellers.

Recent acquisitions
In one of the most widely covered acquisitions in the industry, the Prax Group announced the successful completion of the strategic acquisition of Lindsey Oil Refinery, and its associated logistics assets in the UK, in March this year. This followed an agreement, signed in July 2020, to purchase the refinery from energy major Total.

Also in March, environmental risk reduction business, Adler and Allan, announced the acquisition of three companies into the group: electrical specialists AMGS Electrical, hazardous material specialist Flotech Performance Systems Limited (Flotech) and industrial sewage specialist and underground infrastructure specialist Oneline Surveys

The acquisitions followed changes to Adler and Allan’s senior leadership team and were said to support the company’s ambitious growth plans to solve more customer challenges in a broader range of sectors with a joined-up approach to its services.
Andrew Clarke, energy infrastructure director, Adler and Allan, said at the time: “The acquisition allows us to further execute our strategy, helping clients maintain and decarbonise their energy infrastructure and install new electric vehicle (EV) infrastructure, as the world transitions to a mixed energy future. By combining this with our other energy and forecourt services, we are now able to be a much more strategic environmental partner to customers.”

Early April saw the completion of Greenergy’s acquisition of Republic of Ireland- based Amber Petroleum, the completion of which helped to give Greenergy a growing presence in Ireland where it currently markets through Inver Energy.

Speaking about this acquisition Christian Flach, Greenergy CEO, said: “One of our key strategic objectives is to integrate our existing supply footprint with our expanding retail presence. The acquisition of Amber follows our recent retail investment in 230 retail sites in Canada and will enhance our capabilities in Ireland by building on our existing infrastructure, supply and retail operations. We look forward to welcoming the Amber team to Greenergy.”

Liam Fitzgerald, owner and managing director of Amber Petroleum also added at the time: “Having served our loyal customers for over 40 years Amber’s success has been based on strong relationships with customers, suppliers and staff and we know that Greenergy shares these same values. I am confident that Amber will continue to grow its profile as part of the wider Greenergy organisation.”

Growth has also been seen in the retail sector, with companies such as Motor Fuel Group (MFG) acquiring six forecourts in the Lake District last year from AUK Investments Limited.

Commenting on the purchase at the time, William Bannister, chief executive officer at MFG said: “AUK is a well-respected family business in the Lake District and the six stations that we have purchased from them give us the opportunity to extend our network coverage into Cumbria in what is, normally, a thriving tourist area.”

In January this year, MFG signed an agreement to purchase seven operational stations and nine new to industry (NTI) sites from BP. This is part of a wider agreement including fuel supply for 100 sites. Commenting on the agreement, Jeremy Clarke, chief operating officer at MFG said: “We are particularly delighted with this transaction, given the quality of the operational assets and geographical spread of the NTI sites. Six of the operating stations are in Scotland and one is in Surrey. The NTI sites are spread throughout England and Scotland.”

Across Europe, DCC has had its finger on the pulse of businesses to acquire this year. Telling us more about the recent acquisitions of Jones Oil and Campus Oils Daire Keating, managing director cards, Austria & Ireland, DCC Retail & Oil, said: “We are very excited about working with our new colleagues in Campus and Jones, having successfully completed the acquisitions during the first half of 2021. Both acquisitions will significantly grow our customer base in the Irish market and, together with our Emo business and the recent launch of the Certa network, in partnership with Tesco, we are very well placed to service our customers across the entire Irish energy distribution channel.”

Elaborating further on how these acquisitions fit into Dublin-based DCC’s company strategy, Daire continued: “The retail & oil division operates across eight European countries. We continue to scale the business and the recent activity in Ireland is fully aligned with this strategy. Our 40 years of experience in selling the energy required for our transport, commercial, and heating customers makes us the ideal owner of these businesses. We – in DCC plc – are helping our customers around the world to decarbonise by offering cleaner products such as biofuel in blended or pure forms. We will increasingly offer these cleaner solutions to our customers in the UK and Ireland – such as the new ones we gain with these acquisitions. Together with the recent Campus and Jones acquisitions we have also been developing and investing in both our UK and Irish lubricants distribution platforms. This is a really complementary area for DCC.”

When asked what advice he would give to businesses looking to sell, Daire Keating says: “There is really one thing – preparedness. You can’t be prepared enough, from understanding the conversations that need to happen to knowing the value of your business, really knowing the numbers. Be prepared to state what you want; do you want to stay within the business or walk away – companies, especially family businesses, can be very close to the heart, so this decision needs to be considered carefully.”

Ollie Newbold, partner Randall & Payne, experts in providing business advice and practical accounting solutions, also emphasised the need to be prepared when looking to sell. When speaking about the topic of valuing a business, Ollie said: “Recognising all the factors that have an impact on business is key to achieving the maximum valuation in a business sale process. An experienced advisor in the sector can use detailed knowledge of the industry to obtain best value by understanding buyer motivations, valuation methodology and the impact of seasonality. These points often have a significant bearing on obtaining the best final proceeds. In the oil distribution sector, it is critical that a seller does not underestimate the value of some non-financial aspects of the business – preparation is key in this respect.

A perfect fit
Following the theme of complementary, ‘perfect’ fits, in May this year, DTN announced the acquisition of Online Fuels. Telling us more about why Online Fuels was such a great fit for the company, Doug Bennett, chief product officer, DTN, said: “As a data, analytics and technology company, DTN delivers operational intelligence to organisations with complex supply chains around the world. We are committed to breaking through the noise and providing relevant, independent and actionable intelligence customers can depend on to drive confident decision-making to improve their bottom line and reduce risk

“Online Fuels is the leader in digital transformation solutions for the downstream refined fuels market. The deal enables DTN to connect the buyers and sellers of commodities worldwide through a seamless, transparent and efficient online trading platform.”

Speaking about the sale to DTN, James Stairmand, former CEO of Online Fuels, said: “The plan was always to create technology that helped deliver digital transformation to downstream fuel businesses. DTN is a leading provider of operational intelligence solutions to global refined fuels, agriculture, and other weather-sensitive industries and they currently manage more than 85% of the North American supply chain pricing and billing, making them a perfect fit for our industry-leading technology. With their broad range of customers across industries, Online Fuels’ technology will be used to increase support for customers’ efficient and transparent transactions, ultimately improving business outcomes.”

Family ties
When it comes to family businesses, there are a number of reasons why companies may buy or sell. Acquiring businesses or divisions is a great way to grow an independent business, whereas selling could be the result of succession planning, or a lack thereof.

Reflecting on past mergers and acquisitions, Carrie Marsh, managing director, Marsh Fuels said: “We merged with another fuel business in town many years ago with my Grandfather at the helm, at one point becoming Brain & Marsh in Newbury before transforming into Marsh Fuels. As for now? We are happy as we are.”

When asked if Carrie had ever considered selling, she said: “At 120 years old next year, we’re here to stay for a while yet. I see our business staying within our family and come the day that regulation and Government environmental changes see us heading for the pastures, then perhaps that may be the time to retire and enjoy a winter without worrying about getting the tankers about on the road!”

While some businesses have succession plans in place and every intention of keeping it within the family, this is not always possible for others. Mark Nolan, Nolan Oils “I’d love to expand but it’s a challenge to find the right person to run a third depot with the industry not as attractive to come into as it once was. I can understand why others I know have sold up. Some have no-one to hand it down to, others see buying groups constantly eroding the profit margins and many youngsters perceive it as smelly and dirty industry which reduces new talent coming into it…”

“I would love to hand over to the family but that’s not on the cards, maybe a buyout but I still enjoy helping customers who have been loyal to us for 40 years plus! We tried diversification but it can take your eye off the ball so we sold off Events and Marquees to concentrate on the core business of keeping our customers happy!”

We talked in detail about the challenges of succession planning in our July Issue – read the full article here

Ollie Newbold touched upon Randall & Payne’s experience of working with family businesses: “Having sold two highly respected distributors to two distinct buyer types (one buyer being a family business, the other being a plc), we have knowledge of overcoming the challenges this evolving industry brings.

“In addition to detailed transaction knowledge and experience, our corporate finance team worked with a distributor for a number of years to deliver seismic change within their business, including financing a depot design and build project, eventually realising their dream to exit the business. Our established knowledge of the business enabled us to find the right buyer to ensure that the family ethos of the firm continued. In addition to this, we are increasingly engaged to provide indicative valuations and advice as to how to maximise value in the sector.

The future of the market
It is no surprise in an evolving industry that the medium- and long-term landscape may affect, whether positively or negatively, the acquisition market, as Ollie Newbold concludes: “In the medium term, consideration needs to be given to the impact of future fuels on the independent distributor. These inevitable changes in the future will require time and energy to embed into the business.” Ollie goes on to suggest that companies may be wondering whether now is the right time to consider a sale in order to avoid any potential future erosion of value.

Whether buying, selling, thriving or surviving, it is great to see so much activity in a sector that continues to grow stronger, even amidst global pandemics and daily challenges.

We don’t know what the future brings and what opportunities there may be just beyond the horizon but, as ever, we look forward to always keeping you updated.