Viva Energy acquires OTR Group to expand its convenience and mobility business
Viva Energy Group Limited has successfully completed the acquisition of OTR Group on March 28, 2024, marking a significant milestone in the company’s strategy to become a leading convenience and mobility business. The acquisition is expected to enhance Viva Energy’s position in the Australian market by integrating OTR Group’s advanced convenience and quick service restaurant (QSR) offerings.
According to Viva Energy CEO and Managing Director Scott Wyatt, this acquisition is a crucial step towards the company’s goal of growing earnings beyond AUD500 million (USD325 million) over the next five years. “Having completed the OTR Group and Coles Express acquisitions, we will extend our world-class convenience retail offering across the largest company-operated network in Australia, with a pathway to more than 1,000 stores,” said Wyatt.
OTR Group, as of 31 December 2023, boasts a network of 226 stores, including 195 fuel and convenience stores and 31 standalone stores, with 42 locations outside South Australia. The group also operates 94 QSRs, such as Subway, Wokinabox, Guzman Y Gomez, Krispy Kreme, Hungry Jacks, and Oporto, with 75 fully integrated into the convenience offering. Additionally, OTR Group’s Smokemart and Giftbox (SMGB) network provides tobacco wholesale arrangements and has 278 company-owned stores across Australia.
Viva Energy paid a headline consideration of AUD1,215 million (USD791 million) to Peregrine Corporation for the acquisition, funded by AUD1,065 million (USD694 million) of debt and working capital, and an equity component of AUD150 million (USD97 million) issued to the sellers. The increase in the cash consideration of AUD65 million (USD42 million) primarily relates to capital expenditure on new stores and acquisitions since the announcement of the acquisition on April 5, 2023.
The acquisition is expected to provide high-quality, non-fuel earnings, substantial growth potential, and approximately AUD60 million (USD39 million) of synergy opportunities across the broader Viva Energy C&M business.
The OTR acquisition will increase the contribution from convenience earnings to approximately 50% of C&M’s total earnings and transactions to more than 250 million per year, versus 164 million prior to the acquisition. As electric vehicle penetration grows, Viva Energy believes a larger proportion of earnings from a high-quality convenience offering will create advantages over competitors.
To support the integration and strategic objectives, the Board has approved a one-off five-year incentive for Jevan Bouzo, CEO of Convenience & Mobility. Additionally, OTR Founder Yasser Shahin has been retained by Viva Energy as a consultant for two years to support the transition of the business and the roll-out of the OTR offer across Viva Energy’s network.
Viva Energy is a leading convenience retailer, commercial services, and energy infrastructure business with a history spanning more than 120 years in Australia. The company operates a convenience and fuel network of almost 700 stores across the country and exclusively supplies Shell fuels and lubricants to a total network of more than 1,300 service stations.
