London-based BP plc (LSE: BP) said it agreed to acquire 527 fuel and convenience sites across Australia from Woolworth Group (ASX: WOW), for $1.3 billion. The deal also includes an additional 16 sites under construction.
BP, formerly British Petroleum, is engaged in the exploration and production of oil, natural gas and liquefied natural gas and the refining and marketing of petroleum and lubricant products. BP is one of the largest suppliers of fuel to Australia’s industrial and commercial sectors. There are currently 1,400 BP branded fuel and convenience retail sites across Australia, of which 350 are company-owned. The rest are branded BP but owned by independent business partners.
Founded in 1924, Woolworths Group is Australia’s largest retailer with more than 3,500 stores across Australia and New Zealand that span food, drinks, petrol, general merchandise and hotels. Woolworths Group manages some of Australia’s most recognised and trusted brands, including Woolworths, Countdown, Dan Murphy’s, BWS and BIG W.
Tufan Erginbilgic, Chief Executive, BP Downstream, commented, “The development of high-quality, differentiated fuel and convenience offers is a key part of BP’s strategy – allowing us to grow our marketing business in important global markets.
“We are excited to be establishing this strategic partnership with Woolworths, one of Australia’s largest supermarket retailers. Globally we have developed a winning retail formula where we partner with strong local brands, like Marks & Spencer in the UK, to provide our customers with a convenience retail offer that meets the needs of their busy lifestyles. The combination of all aspects of this strategic partnership is expected to create significant value for BP.”
Initially, BP and Woolworths will launch a Metro at BP pilot program across 16 BP fuel and convenience sites, allowing both companies to test the offer and generate customer feedback. A second phase will see a further expansion of the Metro at BP format across more than 200 sites.
Andy Holmes, President BP Australia, added, “Over the past three years BP has significantly invested in its fuel and convenience sites across Australia. The opportunity to grow our retail business and work alongside Woolworths, with their strength in grocery and food innovation, will further enhance our customers’ fuel and convenience retail experience.
“We enjoy strong, successful commercial partnerships with our many dealers, distributors and suppliers and we look forward to sharing the benefits this transaction brings to us all.
“While Woolworths fuel business has solid foundations, the future combination of BP’s international experience and expertise in fuel and convenience offers with Woolworths high quality food products and loyalty program means that BP expects to realise significant improvements in value.”
The acquisition of Woolworths’ fuel and convenience sites will add to BP’s existing network of 350 company-owned retail sites across Australia. BP also supplies fuel and branding to a further 1,000 sites owned by independent business partners.
Brad Banducci, Woolworths Group Chief Executive Officer, said, “For Woolworths customers our Strategic Partnership with BP will enable them to enjoy our leading Woolworths Reward program at BP fuel sites and ensure they continue to benefit from the 4cpl fuel discount. Longer term, it will also provide them with a compelling, new “food-on-the go” offering through the roll-out of the “Metro at BP” concept.”
The deal, which is subject to approval from the Australian Competition and Consumer Commission (ACCC) and the Foreign Investment Review Board (FIRB), is expected to be completed over the next 12 months.