Suncor Energy Inc. has launched an auction of its Petro-Canada lubricants division, whose white mineral oils are sprayed on gummy bear candy to make it shiny and prevent sticking, people familiar with the matter said.
The sale could fetch around $800 million and help Canada’s biggest energy company pay down debt incurred by recent acquisitions, the sources said this week.
Calgary, Alberta-based Suncor, which merged with Petro-Canada in 2009, is working with Bank of America Corp on the sale process, said the sources, asking not to be identified because the matter is confidential.
Representatives for Suncor and Bank of America declined to comment.
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.
Suncor has been acquiring companies during the two-year slump in oil prices. It spent $4.24 billion to purchase Canadian Oil Sands in March. In April, it agreed to pay about $937 million to buy an additional five per cent stake in its Syncrude oil sands joint venture from Murphy Oil Corp’s Canadian unit.
Petro-Canada purchased its lubricants business in 1985 from Gulf Canada. The unit, based in Mississauga, Ontario, near Toronto, produces more than 350 advanced lubricants for industries ranging from beauty to heavy manufacturing.
Over the past nine months, as the price of crude oil has languished, Suncor has spent about $9 billion on acquisitions and development, giving it a production capacity of about 164,000 barrels of oil per day.
Last week, Suncor announced plans to raise about $2.5 billion in equity by selling 71.5 million of its shares. The offering is expected to close on Wednesday.
© Thomson Reuters 2016