ACCC Forces BP To Back Out Woolies Petrol Deal
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Its back to the drawing board for Caltex, Woolworths and BP after the nation’s competition regulator, ACCC forced the three companies to accept that there is no way it would allow BP to buy the Woolies service stations business.
The market ignored any negatives from the deal - especially for Woolies - and dent the shares of both the retailer and Caltex higher by 1.8% (to $29.94) and 1.6% (to $32.32) respectively.
Caltex presently supplies petrol to those sites. All three companies now have to work out if there is a way for a new deal to be done, or a new buyer found.
A saving grace will be the looming Viva float (valued at around $5.1 billion) which is owned by the UK-based global commodities and oil trader, Vitol (which bought the Shell service stations and refineries several years ago).
Viva is the float of those service station chains presently linked to Coles and the independent Liberty chain, as well associated oil import, refining and distribution businesses.
Brokers report strong interest in the float, so another deal on that basis could be an option for the Woolies service stations.
But it is now up to Woolies to seek a new deal or new buyers after BP opted not to continue with the $1.8 billion purchase first announced in late 2016. It blamed the ACCC which revealed last August ago it planned to block the deal because of its anti-competitive nature.
BP wanted to buy Woolies 543 fuel and convenience stores, which would have seen it emerge as the market leader nationwide. BP offered to sell sites, but it was not enough for the ACCC which said the deal would reduce competition and see motorists pay more for petrol.
There are 1400 BP-branded stores across Australia, with about 350 owned by the company and the rest run by independent operators.
Woolworths issued a statement on Thursday saying it had been notified that BP would not continue with the proposed purchase.
“As a result, the sale agreements, and strategic partnership agreements, entered with BP on 24 December 2016 will no longer be continued by BP," it said.
“As previously announced, Woolworths Group is continuing to engage actively with alternative options for its petrol business."
“Caltex continues to supply fuels to the Woolworths fuel business across Australia under the terms of the arrangement that has been in place for sometime,” a Caltex spokeswoman said yesterday.
But it doesn’t want them and is revamping its own service station and convenience store chain, dropping franchisees and going to a company owned and operated model after being caught up in a franchising abuse scandal.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.