Grace Pacific pumps up with 76 gas
Walter Dods, from left, Jim Yates and David Hulihee will lead a combined company of Grace Pacific and Mid Pac Petroleum that will have an annual revenue of about $425 million. "We're putting two natural resource companies together," Hulihee said. "We have similar ownership in both companies, and we thought it would be a great fit for us." The trio gathered yesterday at a 76 gas station at King and Piikoi streets.
Grace Pacific workers worked on a road paving project yesterday at Wilder Avenue and Punahou Street.
Grace Pacific Corp., the largest roadway paving contractor in Hawaii, has bought the owner of the 76 gas station brand in Hawaii in an all-stock transaction that will create one of the 10 largest locally owned for-profit companies in the state.
Mid Pac Petroleum LLC, a Honolulu-based petroleum marketer and distributor with the exclusive rights to the 76 brand in Hawaii, will become a wholly owned subsidiary of Grace Pacific.
The combined company, which will operate under the name Grace Pacific, will have annual revenue of about $425 million and more than 650 employees. There will be no layoffs, the companies said, and the acquisition, which was announced to employees late yesterday afternoon, will be effective Jan. 1. The privately held companies declined to disclose the value of the deal.
"We’re putting two natural resource companies together," said David Hulihee, chairman, president and chief executive officer of Grace Pacific. "We have similar ownership in both companies, and we thought it would be a great fit for us."
Hulihee, who will be chairman and CEO of the combined organization, said the benefits of the merged entity will include diversified and stable earnings as well as "balancing the low and high spots in both industries."
"We are very excited about the opportunity to continue building one of Hawaii’s largest core infrastructure companies, providing essential materials, services and fuel products to support Hawaii’s growth for decades to come," Hulihee said.
GRACE PACIFIC CORP. » Founded: 1931
MID PAC PETROLEUM » Founded: 2004
COMBINED COMPANY Grace Pacific Corp. bought Mid Pac Petroleum for an undisclosed amount of Grace Pacific stock. |
Former longtime First Hawaiian Bank Chairman and CEO Walter Dods, who led a group of local investors that acquired Mid Pac in 2007, will be the new company’s vice chairman.
Dods, Hulihee, developer Bill Mills and Jim Yates, the president and CEO of Mid Pac Petroleum, are the majority owners of Koko’oha Investments Inc., the parent of Mid Pac Petroleum. Dods, Hulihee and Mills also own shares in Grace Pacific.
"There hasn’t been a new creation of a major company in Hawaii in years, so for me, as an old-time guy, it’s pretty historically significant what’s happening here," Dods said. "All of us have this goal of creating this strong local company."
In 2006, Grace Pacific was forced to suspend road building and resurfacing projects and temporarily lay off about 150 employees due to an asphalt shortage after Chevron Hawaii, one of the state’s two refiners, stopped producing liquid asphalt and Tesoro Hawaii’s supply ran low.
The shortage halted city pothole repairs, state roadway resurfacing and some military projects.
As a result, Grace Pacific later committed $30 million to build an asphalt terminal at Campbell Industrial Park so that asphalt could be imported and stored and "so the people of Hawaii would never again be put in a position where they would be hostage," Dods said.
"That’s a lot of money," Dods said. "When you have a combined company like this, you can do those kinds of things, and we wanted to be sure this community always has asphalt. Without asphalt you don’t put rocks together, you don’t put roads together and you don’t construct bridges and highways."
Dods said the new company will also be in a better position to contribute to Hawaii nonprofits.
"When you put these two companies together, we have the additional strength to make a very powerful local company for community donations," Dods said.
Yates, who will be president of the new company and keep his president and CEO titles at the new Mid Pac subsidiary, said the decision to sell the company to Grace Pacific had nothing to do with either Hawaii’s current economy or the state’s initiative to move away from imported oil.
"There’s certainly a move toward renewable energy and more fuel-efficient vehicles, so that impacts overall demand, but Mid Pac’s been pretty resilient," Yates said. "We’ve done a great job of continuing to maintain pretty much the same volumes."
During the last year, Mid Pac has added 18 new sites with the 76 brand, picking up many of the 7-Elevens on Oahu.
"We flipped 16 of the
7-Elevens that were formerly branded Aloha in the last year, and then picked up two other stations as well," Yates said.
Mid Pac, which was founded in 2004 to acquire the 76 brand assets from ConocoPhillips, owns or supplies 69 branded stations throughout the state.
Yates said Grace Pacific and Mid Pac will continue to run as separate organizations, but "we’ll look for opportunities."
"It could be little things like combining insurance, or synergistic opportunities where we can work together," he said. "We’re going to make sure Grace is going to buy all their fuel from 76 right away, and they’ll probably be paving our locations."
