SHEDIAC, N.B. -- MCW Energy Group Ltd., a Canadian holding company has entered into a binding agreement to acquire Glendale, Calif.-based Western Petroleum Distributors Inc. (Westco), an independent wholesale distributor.
Shediac, New Brunswick-based MCW Energy Group has two business units: MCW Fuels Inc., a distributor of gasoline and diesel fuels to gas stations in southern California, and MCW Oil Sands Recovery LLC. Through an "aggressive" program of mergers and acquisitions such as Westco, the company said that it is planning to expand into other regional U.S. markets.
The acquisition will be implemented in two phases. The first phase details the assignment by Westco to MCW Fuels of seven existing 76 branded reseller distribution agreements for a term of 10 years. The second phase of the agreement is the assignment by Westco to MCW Fuels of an additional nine branded reseller distribution agreements for the same 10-year term.
MCW Fuels would become the sole fuel supplier to a total of 16 Westco-supplied stations located throughout Southern California.
The terms of this deal include a total payment to Westco by MCW of $2 million, of which the first installment of $1 million would be due on or before June 15, 2012, which will secure the first seven stations. The second installment of $1 million would be due on or before Jan. 31, 2013.
MCW has secured $1 million from an existing lender.
"The acquisition of Westco's 76 branded reseller distribution agreements is a very important benchmark in MCW Fuel's growth as we further solidify our position as one of the top three fuel suppliers here in Southern California," said David Sutton, CEO of MCW Fuels
The company expects that the Westco distribution acquisition will add approximately 25 million gallons of fuel to its current annual sales volume of 100 million gallons distributed throughout the state; $250,000 phase hold back will be held unless minimum of 1,065,600 a month is not met in distribution.
Westco offers all grades of gasoline, diesel and clean fuels such as biofuels. The company provides retail branding programs, unbranded supply contracts, fuel and inventory management and a web-based ordering/delivery system on a 24x7 basis.
MCW Fuels markets more than 75 million gallons of branded and unbranded fuels annually throughout Southern California. It now supplies fuel to more than 200 branded and unbranded stations and provides commercial fuels to more than 100 businesses. It retains regional branding rights to major premier brands such as 76, Valero, Alliance and 7-Eleven chains (noncontract branding projects) and offers signage assistance and accounting systems. MCW Fuels provides several value-added services including credit-card processing, inventory control systems and price management services, and it is involved in the marketing of alternative fuels such as hydrogen.