Canadian grocery and pharmacy retailer Loblaw Cos Ltd today struck a deal to sell its gas station business to asset manager Brookfield Business Partners for about C$540 million ($402.17 million).
Loblaw's gas station network is one of the largest in Canada and includes 213 retail gas stations and associated convenience kiosks adjacent to its owned grocery stores across the country.
Brookfield is entering into an agreement with Imperial Oil to rebrand the gas station portfolio to the Mobil fuel brand.
The proposed deal is expected to close in this year's third quarter.
Loblaw, Canada's largest operator of grocery and pharmacy stores, said it expects to use proceeds from the sale for its corporate activities.
"In Brookfield we have a strategic partner with an experienced management team and a strong business track record," said Sarah Davis, president of Loblaw. "They are committed to preserving and growing the elements of the business that matter most to our customers – high quality fuel service and convenience along with PC Plus loyalty benefits."
"Our investment in Loblaw's leading portfolio of gas stations presents an opportunity to own a business with significant scale, strong customer loyalty, and compelling opportunities for further growth," said Cyrus Madon, CEO of Brookfield Business Partners.
"This transaction aligns with our strategy of owning and adding value to high quality businesses with solid long-term fundamentals in sectors we know well. We look forward to working with Loblaw to enhance and grow the current network of gas stations," he added.
Loblaw is the latest company in Canada to sell its gas stations and focus on its core business, while buyers are those who focus on fuel distribution or convenience stores.
With low global oil prices, there has been renewed divestiture and consolidation in the industry. Last year, Imperial Oil sold its remaining 497 Esso retail stations in Canada for a total of $2.8 billion, while this week, Parkland agreed to buy US oil giant Chevron Canada's downstream fuel business, including 129 retail gas stations in the Vancouver area and the Burnaby refinery for $1.09 billion. (See: Chevron to sell Canadian gasoline stations and refinery to Parkland Fuel for $1.09 bn)