Sue Mitchell
May 2 2018
AFR
Woolworths supply agreement with Caltex continues until the fuel business is sold.
Woolworths will decide next month whether to abandon the $1.8 billion sale of its fuel business to BP and pursue other offers.
Woolworths chief executive Brad Banducci says the retailer’s sale agreement with BP, which was struck in December 2016, is due to lapse around June 30.
Woolworths has the option of extending the agreement and continuing to work with BP to come up with a proposal that would overcome the Australian Competition and Consumer Commission’s concerns, or abandoning the deal and accepting other offers.
“We are still working through the myriad of options we have,” Mr Banducci told analysts and media on Wednesday.
“We’ve had lots of expressions of interest from parties, we’re very cognisant of the challenges posed by the ACCC, we’re developing a package of options acceptable to the ACCC – it’s at the top of our list of priorities,” he said.
“We do have a lot of other expressions of interest and we continue to sensibly engage with them as well as work together with BP in terms of the agreement we have with them – it’s very much a work in progress.”
Analysts fear that as the sale drags on, the value of the business may diminish. Woolworths’ fuel sales fell 0.3 per cent to $1.2 billion in the March quarter as higher pump prices sent Easter-adjusted comparable volumes down 6.9 per cent.
BP will decide within weeks whether to launch a legal challenge after the ACCC blocked the deal in December, saying the merger would have reduced competition and pushed up fuel prices.
Woolworths, which being advised by Morgan Stanley, is believed to have had approaches from North American convenience store operator Couche-Tard, Chinese oil and gas company PetroChina, South Australian fuel company Peregrine Corp and private equity funds including Kohlberg Kravis Roberts.
Woolworths originally planned to use the $1.8 billion proceeds from the sale to reduce debt, fund supermarket refurbishments and possibly also return capital to shareholders.
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