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BP outbids Caltex Australia for Woolworths petrol station chain with $A1.8b deal

BP will expand its retail market share to 40% if the transaction is approved.

Nevil Gibson
Thu, 29 Dec 2016

In the second major petrol retailing deal in a week, BP has agreed to buy Woolworths’ chain of fuel stations for $A1.79 billion.

This follows Caltex Australia’s purchase of the Gull stations in New Zealand. Caltex was also tipped as a buyer of the Woolworths chain, which includes 527 service stations and 16 development sites.

The BP deal will make it Australia’s biggest fuel retailer with 1400 sites around the country. In New Zealand, BP was the largest retailer until Z Energy (formerly Shell) absorbed the Caltex and Challenge brands, taking the latter to over 50% market share.

BP also owns the Kwinana oil refinery in Western Australia state, and stakes in the active North West Shelf liquefied natural gas facility and proposed Browse gas-export venture.

Unlike some of its global compaetitors, such as Chevron and Shell, BP is moving deeper into the petrol station and convenience store sector.

Woolworths says BP will expand its 4c-off-a-litre shoppers’  discount offer to additional BP petrol sites.

Loyalty programme partner
BP will also become a cornerstone partner of Woolworths Rewards loyalty programme, which features Qantas Frequent Flyer points.

The two new partners have also agreed to develop a new convenience food offer called Metro at BP, which will draw on the Simply Food convenience store joint venture in the UK with Marks & Spencer.

BP also has similar retailing joint ventures in South Africa, Germany, the Netherlands, Austria and Portugal.

If the pilot is successful BP has pledged to invest further in a development that could see up to 200 BP convenience stores refurbished in the Metro at BP format.

ASX-listed Caltex Australia, which paid $340 for Gull NZ’s 77 sites and other assets, had offered $A1.5 billion for the Woolworths chain.

In a statement, it said its own valuation was full and fair value given the “declining trend in supermarket fuel redemption volumes, the restrictive commercial terms to enable ongoing provision of a fuel discount offer by Woolworths, and considering the fact that the Woolworths network is leased rather than owned.’’

BP Australia president Andy Holmes defends the amount and says the new partnership with Woolworths will create a stronger convenience store business.

“This is highly strategic for Woolworths, they see a great future in convenience, a lot of growth and together we are going to be able to grow,” he told The Australian.

Yet to be approved
The deal is subject to approval from the Australian Competition & Consumer Commission (ACCC).

If approved, BP will emerge with a 40% share of the Australian petrol market after adding Woolworths’ estimated 25% share, while Caltex will have an estimated 17% stake.

Caltex Australia is now unrelated to its former parent Chevron, whose own Caltex-branded stations were sold last year for $785 million to Z Energy.

Z Energy says it intends retaining the Caltex brand in New Zealand for the foreseeable future.

Meanwhile, BP internationally has also recently agreed to a near $US1 billion investment in a vast natural gas field off the coast of Africa and a $US2.2 billion all-share deal for stake in a parcel of UAE oil fields.

Nevil Gibson
Thu, 29 Dec 2016
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BP outbids Caltex Australia for Woolworths petrol station chain with $A1.8b deal