The owner of the former Shell network of petrol stations will significantly boost its convenience retail business after buying OTR Group.
Petrol and diesel supplier Viva Energy will pay $1.15 billion to buy the owner of On the Run convenience stores that are ubiquitous in South Australiaas it looks to boost its activities in grab-and-go retailing to offset the inevitable decline of its core fossil fuels business.
. Viva struck a $300 million deal last September to acquire Coles Express, which it earlier operated in a joint venture with the supermarket giant.He described OTR on a conference call as possibly one of the world’s best convenience retailers, and said the acquisition advances Viva’s vision of being a convenience retailer that happens to sell fuel, rather than vice versa.
“As our stores increasingly become retail destinations, we expect convenience earnings will grow and reduce our dependency on traditional fuels,” Mr Wyatt said., said merging the two businesses had “enormous industrial logic”.
The acquisition, which is subject to competition regulator approval, will add between 6 per cent and 26 per cent to earnings per share. It will be funded by $1 billion of debt and working capital and a $150 million issue of equity to the sellers. The shares issued to Peregrine will be held under escrow for 12 months to 24 months.
Viva said that the deal secured a retail presence that “would otherwise have taken years to develop”. The On the Run network includes 184 integrated fuel and convenience stores and 31 standalone retail shops, while the transaction includes OTR’s Smokemart and Giftbox tobacco and cigarette wholesaling operation and retail store network, and the Mogas wholesale fuel and lubricants businesses in regional SA.
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