Mergers & Acquisitions

Woolworths seeks buyer for Australian fuel retail business

Caltex Australia confirms bid to acquire Woolworths' fuels business

Woolworths Limited has hired Morgan Stanley to sell its fuel retail business in Australia. Woolworths operates about 521 fuel retail outlets, which are supplied by Caltex Australia. Sales at Woolworths’ petrol division were valued at AUD 5.63 billion (USD 4.31 billion) in the 2014-15 financial year.

The unit is expected to fetch as much as AUD 1.5 billion (USD 1.15 billion).

Competition is stiff in the fuel retail business in Australia, as more stations are being opened, resulting in declining same store sales.

Woolworths is trying to turnaround its core supermarket business, with plans to jettison its underperforming hardware business, headed by Masters and Home Timber and Hardware, as well as its other non-core businesses such as EziBuy.

Its rival Wesfarmers Ltd. owns and operates 685 fuel retail outlets under the Coles Express brand, which are supplied by Shell.

Potential buyers include Caltex Australia, BP Australia and Puma Energy. Caltex Australia is on top of the list, given that it is Woolworths’ current fuel supplier. BP Australia has an extensive footprint in Australia, supplying about 1,400 service stations, most of which are independently owned. Puma Energy operates 405 fuel retail outlets across Australia and is Australia’s largest independently owned fuel retailer. Puma Energy is majority-owned by the Dutch Trafigura and the Angolan Sonangol Group. Its operations span more than 40 countries and encompass supply, storage, refining, distribution and retail.

Vitol, a global energy and commodity trading company, headquartered in Rotterdam, Netherlands, was also mentioned as a potential buyer.

 

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