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    Beacon Stores Reclaimed

    Grandchildren of the brand's founder reach deal with Tesoro to acquire a handful of stores some 20 years later.

    SAN FRANCISCO -- Back in 1981, when Tom Dwelle was flying fighter jets, the oil business founded by his grandfather and expanded by his father into one of California's largest independents was sold to a Canadian company. Today, the retired Air Force officer is getting some of that business back.

    Dwelle and his three brothers have their own oil business, Auburn-based Nella Oil Co., a fast-growing Northern California petroleum wholesaler-retailer that's expanding rapidly in the East Bay. Nella's latest acquisition, from Tesoro Petroleum Corp., is 23 of the more than 300 gas stations that were part of the Dwelle family's original company -- the Beacon Oil Co., now long vanished in a series of refining industry mergers, reports the East Bay Business Times.

    "We had no clue that we could get these locations back," Dwelle said. "It's going to be a big homecoming."

    "Four or five are the originals, for sure," said Dwelle, who owns Nella and Flyers LLC, a convenience store developer, in a closely held partnership with his brothers, all pilots. Some of the employees at those stores began with Beacon Oil, Dwelle said. Others joined after the Dwelles sold Beacon.

    Beacon was created in 1931 in Hanford by Dwelle's grandfather, Walter Allen, and became a major independent refiner-retailer under his father, Thomas Dwelle. "We built a lot of these stores and certainly ran all of them at one point," Dwelle said.

    The "homecoming" increases Nella's gas station count to 67. Most operate as Chevron, Exxon or Shell outlets in Northern California. Nella operates Flyers convenience stores at many of its stations, including Fairfield, Antioch and San Leandro.

    With a $25 million purchase of Olympian JV of South San Francisco last spring, Nella acquired 37 Commercial Fueling Network sites and four nonattendant cardlock stations, including outlets in Richmond, Oakland, Hayward and San Leandro, Calif. Nella supplies nearly 50 independent dealers in Northern and Central California and is a branded wholesale-retail distributor for Exxon, Chevron and Shell fuels.

    The return of the gas stations to their original owner's family comes as a footnote to the mergers and consolidations that have dramatically changed the oil business in the East Bay and across the globe. The stations that started as Beacons have changed owners five times in the past 20 years ? twice in the past two years. Beacon Oil was sold in 1981 to Ultramar, a Canadian subsidiary of the British Ultramar Oil Co. PLC.

    The Dwelle brothers formed their own company in 1979, while two were serving as career military pilots and a third worked in Beacon's marketing. After the parent Ultramar was bought in a hostile takeover in 1992, its North American operations were spun off as the independent Ultramar Corp.

    Ultramar merged in 1996 with Texas' Diamond Shamrock to form Ultramar Diamond Shamrock Corp. Valero Energy Corp. bought UDS for $6 billion in 2001 and, as a condition of antitrust regulators' approval, was ordered to sell UDS' Golden Eagle refinery -- bought from Tosco Corp. in 2000 ? and 70 retail outlets in Northern owned by Ultramar. Sixteen of those stations are in the East Bay. Sixty-eight are Beacon branded and two sell gas under the Tesoro banner.

    Tesoro bought the Golden Eagle package earlier this year and, to reduce debt, is selling 23 stations to the Nella-Flyers partnership and 47 others to a joint venture of USA Petroleum Corp. of Agoura Hills and Green Valley Gas LLC, owned by the Moller family, for $67 million.

    To reduce debt, Tesoro is selling a $110 million Minneapolis-area pipeline system and its marine services unit as well as the Northern California gas stations. "We purchased, basically, a third of them," Dwelle said. "We formed a coalition with USA Petroleum."

    The deal, which doesn't require regulatory approval, is expected to close by the end of the year. USA will add the 47 stations to its roster of 130 self-service gas outlets and convenience stores in 13 states. Although the Dwelle brothers bought back some of the stations, they won't regain the Beacon brand name. Valero retains the brand name. "Under the terms of the agreement, the buyers will need to work with Valero on rebranding within a certain amount of time," Tesoro spokeswoman Tara Ford said.

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