Big merger - BlueStone Press
February 24, 2018
BSP Business

Big merger

Paraco, Kosco and Heritagenergy: The merger, as explained by Ken Davenport and Barry Motzkin

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Way back in 1929, Walter Davenport of High Falls founded a fuel-oil delivery company with his sons. In 1974, the Davenports created a joint venture with another family to form Heritagenergy. Recently, customers of Heritagenergy, which has also been providing propane, may have noticed that they are suddenly receiving service from either a company called Kosco-Heritagenergy or from Paraco Gas. Customers who like the idea of supporting a local business – and having the personalized service that usually goes with it – were, perhaps, taken aback by this development.

 

In an effort to find out what was going on under the corporate surface, the BSP talked with Ken Davenport, co-owner of Heritagenergy, and Barry Motzkin, regional manager at Paraco, in a joint interview. Here’s what they had to say.

 

Will the Heritagenergy name, and the company itself, cease to exist?

Davenport: “There’s going to be a delivery company called Kosco-Heritagenergy. There’s going to be a real-estate company, Heritagenergy, that owns all the offices and the terminals. Paraco has purchased the propane company. If you’re a propane customer, your bill will come from Paraco. If you’re a fuel-oil customer, your bill will come from Kosco-Heritagenergy.”

Motzkin: “Effective Dec.7, Paraco purchased the assets of Heritage Propane. Effective Jan.1, there’s been a merger, a joint venture, between Kosco and Heritagenergy.” (Paraco bought Kosco in 2015.)

 

What will this mean to Heritagenergy customers in practical terms?

Davenport: “What that means is that there’ll be better coverage and more options for all of our customers, more resources – more trucks, technicians, customer service reps, drivers. Shared infrastructure. We now have the largest infrastructure of any organization in the Hudson Valley.”

 

If some of Paraco’s customers in other areas are having a crisis, how will it affect the Hudson Valley?

Motzkin: “This region is run independent of the other regions. I’m the regional manager for Paraco-Kosco and for Kosco-Heritage. All the local resources will stay in this region.”

 

What will happen to the Heritagenergy work force?

Motzkin: “One thing we’re really excited to say is that all the employees of both companies will still be remaining with the company.” Furthermore, he said, “the two phone systems are not tied together,” meaning that when a customer calls a local number for service, the call will not be re-routed to a faraway corporate office.

 

A family affair

Davenport: “Walter Davenport & Sons was a company that was formed in the 1920s by my great-grandfather, so I’m fourth-generation in this organization. In the 1970s, my dad, Bill Davenport, and Abel Garraghan formed a similar joint venture to what Heritage and Kosco are doing today, put Walter Davenport’s sons and R.W. Garraghan’s sons together to form a better delivery company for the valley. Fast-forward from the ’70s to 2018, really Kosco and Heritage are doing the exact same thing – taking these two companies that service similar footprints and putting them together to get better services for everyone involved. Why would I choose to do this now? Well, it’s better for the community, and in the world we live in, getting better efficiencies and better economics is what you have to do to survive. Patrick [Garraghan] and I just looked at it as a natural progression for what we’re trying to do.”

Motzkin: “It is a merger, it’ll be a new corporation made up of Kosco and Heritagenergy. Paraco has owned Kosco since 2015. My family bought Kosco in 1956. My family has run Kosco for many many years, until it was sold to Paraco in 2015. You’re talking very long-term families – the Garraghans, the Davenports, the Motzkins have all been the fabric of these communities. Kosco, Heritage and Paraco all have a large investment in the community philanthropically, and that will continue, most likely in a larger capacity.”

 

Some background on Paraco Gas

Motzkin: “They’re really a regional company. Their business model does include expansion, both regionally and locally in the Hudson Valley. I think our joint venture with our new partners indicates our commitment to the Hudson Valley. What’s interesting is that Paraco is a family-owned company also, since 1968. They’ve kind of traveled in the same direction: bought other companies for efficiencies. It’s a very common story – people who have had long-term relationships in their communities for many years now have formed this merger.”

 

Are we moving toward a less competitive local energy market? Davenport: “Our perspective is that there’s very healthy competition in our industry. In fact there are probably more fuel companies today in the Hudson Valley than there were 30 years ago, definitely more propane companies.”

 

A tough time to do a merger

Motzkin: “You’re talking to us in the midst of a very challenging time, weather-wise. During the recent 15-20 days of historic cold weather, you’ve heard there’ve been problems with distribution of product. The reality is, every company has struggled with the distribution side. We’re doing this during the cold spell because we think that’s how we can better serve the customers. We can consolidate routes, we can get more deliveries made. Our service techs can get to the homes quicker. That’s really what’s going to be beneficial to the customer. Going forward, our ability to offer newer technologies, more efficient ways of managing your fuel consumption, we’ve got the size and ability to do that.

 

“It’s a tough time to do a merger. We just completed the joint venture and the acquisition, and you’re asking questions about what it’s going to look like … We’d love to visit with you again in the springtime when we could give you a little more detail about what’s planned.”

 

Stay tuned for an update come spring on how the new partnership is doing.

Heritagenergy, Paraco

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