ic vehicles and potentially other alternative fuels. As with previous industry sales, the 7-Eleven deal is likely to mean further consolidation for fuel sales and convenience retail. 7-Eleven has indicated a $2 billion price tag for its 9 per cent market share in fuel sales and market-leading national convenience store network.  For comparison, the exit by Woolworths yielded $1.8 billion for 500 sites in 2016, while Coles agreed in September 2022 to a $300 million deal for 710 sites. Coles’ sale to Viva Energy involved the assignment of leases worth more than $800 million, notionally lifting the value of that deal to more than $1.1 billion. Woolworths sold its fuel and convenience store chain to BP, which now commands a dominant market share after merging its existing site network with the Woolworths outlets. While Viva Energy was wrapping up the Coles Express acquisition, it started negotiating a $1.13 billion deal for 205 fuel and convenience store sites operating under the OTR banner. The South Australian-based Peregrine Corporation, a private company owned by the Shahin family, is the vendor for the OTR outlets. The OTR deal is yet to gain regulatory approvals but Viva Energy plans to rebrand Coles Express to OTR and establish the headquarters for the merged businesses in Adelaide. Why they’re leaving the sector The decisions by Woolworths and Coles Group to exit the fuel and convenience store markets reflected concern about industry consolidation and volatility in market supply and pricing volatility. The logistics of running convenience stores were not as easy as they might have looked for supermarkets blessed with substantial buying power and marketing crossovers such as fuel discounts and loyalty programs. In offloading their fuel and convenience businesses, both supermarket goliaths indicated a preference for directing capital expenditure and operational focus towards their food and liquor businesses, albeit Woolworths subsequently divested its liquor operations, too. 7-Eleven Holdings and Peregrine Corporation have no doubt weighed up the same considerations about industry consolidation, market volatility and emerging challenges from retail competitors and the transition from petrol to energy alternatives. Fighting challengers from the industry would likely be capital intensive, making operational scale critical for continued viability, let alone profitability. And as family-owned, private companies, both businesses would have struggled to clear that hurdle. The opportunity to sell to a major corporation with deeper pockets, and realise a handsome return on the family’s long-term build no doubt would have led to the sale decisions. The 7-Eleven brand was secured by the Withers and Barlow families in a master franchise agreement with the Southland Corporation in the US. RG Withers was one of four grocery wholesalers supplying independent supermarkets when the first 7-Eleven in Australia opened in Oakleigh, Victoria in 1977. The wholesale business was later acquired by Davids Holdings which, in turn, became the cornerstone of Metcash Holdings, which is the key supplier for the convenience store sector.  7-Eleven Holdings became one of the top five fuel and convenience chains in 2010, when it acquired 295 service stations from ExxonMobil for what is believed to be close to $300 million. The company bought owned and leased service stations after the Australian Competition and Consumer Commission blocked a sale of the 295 sites to Caltex. 7-Eleven now has around 750 stores located in all mainland states and the Australian Capital Territory and reportedly has been streamlining its network of non-fuel convenience stores. Michael Smith, chair of 7-Eleven Holdings, contends the business “has great momentum and a compelling strategy for growth”. Smith said the sale process is at an early stage and is expected to take a number of months, with the prospect of regulatory assessment if an existing industry participant or an overseas buyer is involved. OTR has 1000 outlets in its sights The Viva Energy acquisition of Peregrine Corporation’s OTR business is currently seeking regulatory approvals, a process that may well be advantaged by the Adelaide headquarters plan. Started in 1984 with a single service station in the Adelaide suburb of Woodville Park, OTR now operates in South Australia, Western Australia, Tasmania and the Northern Territory. With the proposed merging and rebranding of the Coles Express outlets, OTR will have around 1000 outlets nationally if the Viva Energy acquisition gains approval. The acquisition also includes Peregrine Corporation’s Smokemart and GiftBox stores. Yasser Shahin, a director of Peregrine Corporation, said the Shahin family will become a significant shareholder in Viva Energy Holdings, which is listed on the Australian Securities Exchange. Shahin will also continue to work in the merged OTR and Coles Express business if regulatory approvals are secured. Viva Energy CEO Scott Wyatt expects the OTR deal to “lift the standard of convenience retailing” in Australia and, as retail destinations, to reduce our dependence on traditional fuels. Wyatt said OTR outlets offer an attractive and welcoming store environment, supporting increased “dwell time”. 7-Eleven also believes it has established a platform for growth across convenient food, continued transformation of the total merchandise offer, digital and format innovation as well as new stores.  The issue for 7-Eleven is whether or not there is a prospective buyer that is willing to pay $2 billion in an industry facing a challenging and highly competitive outlook.