Woolies offloads fuel network for $1.73bn
WOOLWORTHS has struck a deal to sell its petrol station network for $1.73 billion to a UK retail group.
The supermarket giant said its 540 sites would be sold to British petrol-station owner EG Group.
Previously, the Australian Competition and Consumer Commission had rejected an attempt by Woolworths to sell its petrol-station business to BP for $1.8 billion.
As part of the latest transaction, Woolworths and EG have struck a 15-year commercial alliance covering fuel dis- count dockets, loyalty program points and the supply of grocery items to the stations.
Woolworths chief Brad Banducci said the supermarket chain’s 4c-per-litre fuel discount would continue to apply across the network after the change of ownership.
Customers would still earn Woolworths Rewards points on fuel and merchandise purchases, and the supermarket giant would launch a new wholesale food supply agree- ment with EG. “This transaction is a positive for our customers, our team and our shareholders,” Mr Banducci said.
“The agreement will continue to strengthen the opportunities our customers have for greater value when shopping with us, with the benefits of the Woolworths Rewards program and the fuel discount offer set to continue.
“A long-term wholesale food supply arrangement will also ensure that EG Group can benefit from competitive product sourcing, including Wool-
worths’ own brands, to provide a world-class convenience offer that will add further scale to Woolworths.”
How Woolworths’ branding will be used across the network following the change of ownership is still being negotiated.
EG operates 4700 petrol stations across Europe and North America, employing 28,000 people.
Woolworths’ petrol management and employees will transfer to EG once the sale has been completed.
EG will also set the pump price following the deal.
EG Group founder Mohsin Issa said Woolworths’ network presented a fantastic opportunity to further grow EG’s international footprint and deliver a best-in-class retail experience in a new geography.
“We are committed to investing in the site network, introducing leading retail brands, developing the alliance with Woolworths and working with the exceptional management team,” Mr Issa said.
The deal must be approved by Foreign Investment Review Board.
Woolworths said it expect- ed to get this approval early next year. Mr Banducci said Woolworths, which also owns Dan Murphy’s and Big W, would consider “a range of options” for the use of the sale proceeds, including returning the cash to shareholders.
Woolworths extended its partnership with fuel suppler Caltex in July after the ACCC declined to approve the BP transaction late last year.
A Woolworths spokesman said the partnership with Caltex, which will involve it opening 250 Metro convenience outlets, would not change.