Petroleum Trends International, Inc. – Publishers of JobbersWorld
July 11, 2024
Cadence Petroleum Group
Cadence Petroleum Group is a leading distributor of lubricants, fuel, antifreeze, diesel exhaust fluid, and other ancillary products. Within less than 10 years, Cadence Petroleum has grown organically and through 12 acquisitions to become a true titan in the US lubricants business. And like other Titans previously profiled in JobbersWorld, Cadence Petroleum Group’s substantial growth has been fueled in a large part by private equity investments.
Headquartered in Charlotte, NC, Cadence operates in 40 locations spanning 14 states from, Indiana in the north, Louisiana in the South, Oklahoma in the west and Virginia on the east coast. In addition to distributing all major brands, Cadence markets several private label brands, including the Cadence Compass Lubricants brand.
Cadence Petroleum’s roots date back to 1947 when John Quincy Pugh, Jr. established the first Pugh’s Service Station in Asheboro, NC. From its humble beginning, Pugh Oil Company opened 20 service stations and established Pugh Lubricants in the 1980’s. Under the stewardship of four generations of dedicated and driven Pugh family members, Pugh Lubricants experienced significant growth and expanded to become one of the largest, multi-state lubricant distributors in the Southeast.
On November 22, 2016, Tenex Capital Management acquired Pugh Lubricants (later rebranded as Cadence Petroleum Group) and the distribution assets of Pugh Oil Company, Inc. Tenex Capital Management is a private equity firm that invests in middle-market companies and its acquisition of Pugh was a platform to accelerate Pugh’s growth and expand its geographic reach through add-on acquisitions. The first of these acquisitions came in March of 2017 when the company acquired Apollo Oil.
Apollo Oil was founded in 1972 as a single gas station in Camargo, Kentucky. Since that time, Apollo grew to become a powerhouse in the region by adding service stations and expanding into lubricant distribution covering Kentucky, West Virginia, Virginia, Indiana, Ohio, Tennessee and Missouri. Apollo has facilities in Winchester, KY, Columbus, OH, , Nashville, TN, and Nitro, WV. Pugh and Apollo had very little overlap in geography and they continued operating as separate divisions and maintained their legacy company names.
The Apollo acquisition was quickly followed by the acquisition of Veteran’s Oil in September 2017. Headquartered in Birmingham, AL, Veteran’s Oil is a leading regional distributor of fuels, lubricants, diesel exhaust fluid (DEF), and related products and services for the automotive, commercial, and industrial markets. Veteran’s Oil covers the Alabama and Georgia markets from distribution centers in Birmingham, and Atlanta. This geography bordered Pugh’s existing company footprint that included North Carolina, South Carolina, Virginia, Tennessee, Kentucky, Ohio, and West Virginia.
In relatively rapid succession, Pugh then acquired Halco and Mid-South Sales in December of 2018, and January 2019, respectively.
Founded in 1979 and based in Norcross, Georgia, Halco distributes its products throughout Georgia, South Carolina and portions of Alabama and North Carolina. In addition to distributing industrial lubricants, bulk motor oil, bulk oil products, packaged products, and specialty lubricants, Halco equipment division installs and serviced lubrication equipment, auto lifts, and other lubricant related equipment.
Mid-South Sales is a well-established regional distributor of fuel, finished lubricants, antifreeze, and other ancillary product lines throughout Arkansas, and portions of Mississippi, Tennessee, Alabama, and Missouri.
While each of the companies acquired by Pugh operated under their legacy names, there was a change in March 2019 when the organization rebranded the combined companies as Cadence Petroleum Group. Cadence Petroleum Group, however, continued to operate through its five brands in twenty locations and local service areas across the southeastern United States.
The year following the rebranding, Cadence acquired Davison Fuel & Oil. Davison is headquartered in Mobile, Alabama, and is one of the largest distributors of fuels, lubricants, DEF products, and related petroleum products throughout the Southeast. In addition, Davison is one of the largest marketers of fleet card management products with its Fuel Masters Fleet Card.
Tenex and management worked in close collaboration to lead a comprehensive operational transformation of the acquired businesses. These efforts included implementing enhanced financial and operational reporting and analytics, installing a CRM system and a standardized management process, securing new distribution territories, integrating all acquisitions under one centralized leadership structure. In addition, they rebranded Cadence at the corporate level while maintaining local brand equity.
During Tenex’s ownership, Cadence grew to become one of the largest lubricant distributors in the U.S., while diversifying the business across geographies, vendor partners, and end market verticals. On October 1, 2020, Tenex Capital Management sold Cadence Petroleum Group to Wellspring Capital Management LLC.
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Wellspring Capital Management is a leading private equity firm headquartered in New York. Since its founding in 1995, Wellspring has raised over $4.5 billion of initial capital commitments through six private equity funds. Over the past 27 years, Wellspring has invested in over 50 platform investments and completed over 80 add-on acquisitions across various segments of the U.S. and global economies.
Acquisitions continue under Wellspring’s ownership with Stockman Oil as the first in February 2021. Similar to Pugh’s roots, Stockman Oil was founded as a service station in 1932 by Abner P. Stockman in Greenwood, SC. His son, Pierce Stockman, led expansion into gas stations and convenience stores, and Pierce’s son, Chip Stockman shifted the company to focus on fuel and oil distribution. The company offers a full line of petroleum products to serve customers in Georgia and South Carolina which further strengthened Cadence’s presence in this region.
The Stockman transaction was followed by Cadence acquiring Frost Oil in August 2021. Frost is a leading fuel and oil distributor in their operating region of Arkansas, Missouri, and Oklahoma. The business was founded in Fort Smith, Arkansas by Jack Frost in 1977 as a Gulf Oil distributorship and has grown to cover NW Arkansas, SW Missouri, and Eastern Oklahoma.
These and other acquisitions closed under Wellspring Capital Management are shown below.
Cadence has grown to become a true titan in lubricant distribution and they did so in a notably short prior of time. Also notable is how Cadence expanded its geographic reach. In a challenging strategy to execute due the potential for brand and channel conflicts, Cadence expanded out carefully from its original footprint in North Carolina by partnering with select distributors it had relationships with in adjoining regions. They have invested heavily in people and systems to support the existing business and to handle future acquisitions. So, what’s next for Cadence? Since private equity is typically about a build and exit model, chances are that the next acquisition, either by, or of Cadence, will be big.