Australian retailer Woolworths to sell 527 fuel stations to BP for $1.3 bn
28 December 2016
Australian retailer Woolworths Ltd yesterday struck a deal to sell its chain of petrol stations to British energy giant BP plc for A$1.8 billion ($1.3 billion), in order to focus and invest on its core supermarket business.
Under the deal, Woolworths, Australia's second-largest company by revenue, will sell its 527 owned fuel stations and 16 committed development sites to BP.
Caltex Australia currently supplies fuel to Woolworths' petrol stations, which also bid for the business. Under new deal BP will supply and sell the fuel.
The fuel business reported sales of $4,611.8 million in FY16 with EBIT before significant items of $117.8 million. Included in the FY16 EBIT are overhead and other costs that will remain with Woolworths following the completion of the transaction of $13 - $19 million.
Also included in the FY16 Fuel Business EBIT is the cost of funding the full 4cpl fuel discount offer of approximately $70 million in FY16. Upon completion, Woolworths will equally fund the 4cpl fuel discount offer with BP.
BP and Woolworths also signed an agreement to continue a fuel voucher scheme where both companies will jointly trial a convenience business at 200 of the fuel stations.
Woolworths CEO, Brad Banducci said, ''This transaction is a win for Woolworths customers and shareholders ……. The release of $1.785 billion from the sale will be used to strengthen our balance sheet and reinvest in our core businesses – which will further benefit customers and shareholders.''
BP Australia president, Andy Holmes said, ''We are excited to bring BP's global expertise and success in food and convenience offers to Australia through this partnership with Woolworths. Around the world we have delivered leading offers like this via long-term partnerships with other leading food and grocery retailers including Marks & Spencer in the UK and REWE in Germany.