BP has agreed to buy Woolworths’ 527 fuel convenience store outlets and 16 development sites.
The deal with BP ends the ambitions of fuel retailer Caltex, which had made an offer to buy the Woolworths service stations.
Under the deal Woolworths’ four cents per litre fuel discount offer and customer rewards programs will be maintained and expanded to some BP stations.
“This transaction is a win for Woolworths customers and shareholders,” said Brad Banducci, CEO, Woolworths.
“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.”
Banducci said the Metro at BP concept will be trialled at pilot sites and, if successful, will be rolled out at up to 200 BP convenience stores across the country.
“It will result in Woolworths having a larger platform for our redemption and reward program, as well as providing us with a unique opportunity to partner with and draw on BP’s success in rolling out market-leading convenience food offers globally,” Banducci said in an announcement to the ASX.
BP Australia President Andy Holmes said his company had already experienced success in similar strategic partnerships around the world, including with Marks & Spencer in the UK and REWE in Germany.
“This new partnership is great news for all Australian consumers, who will in future be able to enjoy the combination of BP’s premium fuels, a world class convenience food offer and an enhanced loyalty program,” Mr Holmes said.
Banducci said while a number of parties had expressed interest in the fuel business, BP’s offer met Woolworths’ long-term goals and offered better shareholder value.
The deal will need approval by the Australian Competition and Consumer Commission as well as the Foreign Investment Review Board.
It is expected to be completed no earlier than January 2, 2018, with Woolworths’ existing Caltex co-branded sites continuing to operate in the interim.
Meanwhile Caltex has responded to today’s announcement, asserting while it is “naturally disappointed that the successful alliance will come to an end,” that it was more important the company exercised financial discipline in pursuing growth.
“Caltex will continue to pursue profitable growth by securing new wholesale and retail volumes, such as the recent Milemaker and Gull acquisitions, and investing in our supply chain, including our retail network and core transport fuels infrastructure,” said Julian Segal, CEO, Caltex.