Giant nears transfer to Texas-based Western Refining - East Valley Tribune: Business

Giant nears transfer to Texas-based Western Refining

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Posted: Sunday, April 1, 2007 8:18 am | Updated: 6:47 pm, Fri Oct 7, 2011.

Giant Industries, the company that grew from a single service station into a $1.5 billion oil company, is slated to disappear.

Scottsdale-based Giant operates three refineries, two wholesale gas distributors — Phoenix Fuel and Dial Oil Co. — a crude oil pipeline, a fleet of truck transports and 153 retail stores/gas stations.

The company is on track to be devoured by El Paso, Texas-based Western Refining Co. within months. The deal, which has been approved by stockholders of both companies, is pending federal regulators’ approval. It would create the fourthlargest publicly traded independent oil company in the country.

But the man who gave birth to the business, named it Giant in hopes it would grow into its name, and sat at its helm until he was kicked to the curb five years ago, is sorry to see it happen.

“I built it for 42 years, and it will be gone before long,” said Jim Acridge, Giant’s founder and former president. “Everything I built is going to be gone.”

Acridge doesn’t have a stake in Giant’s fate anymore. He lost his job and all his shares in bankruptcy court in 2002.

But you could hardly argue that Acridge understands the business. It was a Western town that he bought and turned over to family and friends to run — not his oil company — that felled him.

“I can’t say it’s a bad deal. You could argue both sides,” Acridge said of Western’s $77 a share bid for Giant. “But if you look inside the deal you realize what Giant is giving up.”

Acridge contends Western is buying Giant not so much for its refineries or its gas stations, but for its distribution arm Phoenix Fuel. Western already does big business with the local distributor. Acridge said he’d “maximize the deal between Phoenix Fuel and Western” and keep running Giant as an independent. In the long run, he believes, he’d make a bigger profit.

A Giant official did not return calls. But Giant has done well in the five years since Acridge unwillingly relinquished control. Giant’s stock has been hovering around $75 in recent weeks. In March 2002, shares went for about $10.

The company’s portfolio looks very different. Giant sold some businesses and bought others, shying away from the retail side of oil and gas operations and emphasizing refining and wholesale operations.

Giant’s shares tumbled in the fourth quarter of 2006 after a couple of refinery fires. The fires, the cost of repairing the damage and lost business due to refinery difficulties impacted the company’s 2006 earnings, insurance rates and even the offer from Western.

Western’s original offer was for $83 a share. But while Giant’s earnings were way down in 2006, revenue was up. Giant’s revenue for the quarter that ended Dec. 31 increased nearly 9 percent from a year earlier, and annual revenue was nearly 17 percent higher than 2005 results.

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