By George Gill
Lubrizol agreed to acquire Chemtool, saying its private
label grease manufacturing is a good fit with Lubrizol’s additives business.
Terms were not disclosed.
The deal is expected to close in the fourth quarter,
following regulatory approvals.
Val Pakis, Lubrizol’s vice president for driveline and
industrial additives, said Chemtool provides a service to its customers doing
things some customers no longer want to do, which is a model familiar to
“We have this custom solutions model here at Lubrizol where
we blend a lot of finished lubricants for customers who for whatever reason don’t
want to do that internally,” Pakis told Lube Report. “And over the years, both
Chemtool and Lubrizol have shared a similar customer base, and many of our
customers have decided to outsource their grease manufacturing, and they
outsource it to Chemtool. So it’s a private label business, where Chemtool has
been providing a service to our mutual customers, and that fits exactly what
Lubrizol wants to do. They’re established as a primary private label grease
manufacturer in North America.
“It’s not really in competition with our existing customer
base at all,” Pakis continued. “It’s a niche – private label grease manufacturing
– to provide a service to our existing customers.”
Pakis lauded Chemtool for its tremendous growth over the
years. “We’re hoping that from our perspective, the synergy is that we have a
global footprint,” he said. “It’s really tough for a company the size of
Chemtool to follow their global customers around the world providing the level of
service the customers demand, and it’s something Lubrizol does well. Secondly,
from a technology perspective, we are good at what we do with additives, and
hopefully there will be some ability to improve the quality of the grease
products on a worldwide basis.”
While Chemtool has a small presence in both Europe and
China, Pakis said Lubrizol will be able to help it expand its reach to a much
wider geographic market. “To be able to satisfy a global major and to do that
effectively these days is not easy for a smaller company, or a company the size
of Chemtool,” he pointed out. “Lubrizol has affiliates, we have manufacturing
facilities in 17 countries around the world, and we can leverage that not
necessarily just to expand the grease business, but to expand all of Chemtool’s
business globally and do it in an effective way. We’re just scratching the
surface on all this.”
He emphasized that Chemtool, as part of Lubrizol’s industrial business, would remain an independent company, and will be led by Dean Athans, Jim Athans, and Dave Klesmith. “We’re going to run this as an arm’s length independent company – we couldn’t do it without them,” Pakis said.
“They’ve been a supplier to me for almost 50 years,” Chemtool
Chairman James Athans told Lube Report. “Lubrizol is global, and we were, but
not like they were. They’re going to help this company grow. It’s going to be
independent, and keep the name. I have confidence they will do that because
with all their acquisitions they’ve kept the companies independent. I couldn’t
have found anyone that I’d rather sell to than this company.”
Industry contacts sounded a more cautious note about the
“From a customer standpoint, and from their standpoint, this
situation creates a real dilemma for Lubrizol and for the customers,” Steve
Milam, president and CEO of Lubricating Specialties, told Lube Report. “It’s
only through time that we’re going to be able to sort out what it means. We’re
just going to have to be willing to give it some time. It is a real dilemma
when you compete with your customers.”
Milam did compliment Lubrizol for calling and talking to its
customers prior to issuing the announcement about acquiring Chemtool.
Chuck Coe, president and principal consultant for Grease
Technology Solutions LLC, said some grease manufacturers that do business with
Lubrizol may see cause for concern from a technology standpoint.
“It would depend a lot on your relationship with your additive
suppliers,” Coe told Lube Report. “If you’re simply buying additives from Lubrizol,
it’s probably less of a concern. If you’ve had cooperative development work
with Lubrizol, I would think it would be a higher level of concern.”
He said another possible concern other grease manufacturers
who purchase technology from Lubrizol might have is whether the additives maker
would reserve its best technology for its own grease company. “As they do new
developments for their Chemtool greases, are they going to make the newest
technology as readily available to the general marketplace since they now own a
According to its web site, Chemtool has facilities in eight
locations: Rockton, Ill., Crystal Lake, Ill., Milan, Mich., Tehachapi, Calif.,
Elkhorn, Wis., Diegem, Belgium and Shanghai, China. The company is
headquartered in Rockton.
In 1992, Chemtool acquired Metalcote, a specialty, private
label manufacturer of lubricating greases based in Minneapolis, Minn. The
Metalcote division manufactures private label greases and lubricants for a
majority of the major oil companies, agricultural and consumer markets.
In July 2006, the company announced it had installed what it
believed to be the world’s largest grease kettle, a reactor with capacity of
130,000 pounds. Chemtool at the time said most of its sales growth had come
from contracts to blend volumes sold under other companies’ labels.
Lubrizol, headquartered in Wickliffe, Ohio, was itself
acquired this year by Berkshire Hathaway for $9.7 billion.