Tulsa-based SemGroup to buy Koch assets

Journal Record, The (Oklahoma City), Apr 19, 2005 by Journal Record Staff

SemGroup has agreed to buy a majority of Koch Pavement Solutions' asphalt operations and assets in the United States and Mexico from Koch Materials Co.

Tulsa-based SemGroup expects the acquisition to close during the second quarter. Terms of the agreement were not disclosed.

The acquisition includes 47 asphalt terminals in 24 states in the United States and 13 asphalt terminals in Mexico; five regional technical centers; 65 worldwide patents and 10 pending patents. All of the assets will be operated by SemGroup's asphalt business unit, SemProducts, said Tom Kivisto, SemGroup president and CEO.

Koch Pavement Solutions' growth since its founding in 1959 is impressive, Kivisto said. We believe it provides an excellent expansion vehicle for SemProducts and complements SemGroup's crude oil, natural gas, natural gas liquids and refined products business segments.

Koch Materials, an indirect subsidiary of Koch Industries, is one of the largest U.S. asphalt retailers and the largest producer of asphalt emulsions and polymer modified asphalt cement in North America.

SemGroup will gain about 470 employees in the United States and 180 employees in Mexico through the purchase. The Mexico portion of the acquisition is a self-sufficient, stand-alone business currently operating as Koch Materials Mexico. The purchase marks SemGroup's first move into the Mexican market.

Koch Materials will retain facilities in North Dakota, South Dakota, Minnesota, Wisconsin, Iowa and Nebraska that receive asphalt produced at a Minnesota refinery owned by Flint Hills Resources, an indirect wholly owned subsidiary of Koch Industries.

Koch Materials and Koch Materials Mexico supply asphalt products to more than 3,000 customers in the United States and Mexico, including government agencies, national contractors and numerous regional and local contractors.