BP eyes legal action in its battle to buy Woolworths’ petrol stations

SCOTT MURDOCH & BRIDGET CARTER
February 26, 2018
The Australian

BP is due to decide in the next few weeks whether it takes the Australian Competition & Consumer Commission to court in the next step of its battle to buy Woolworths’ petrol stations.

DataRoom understands that BP offered to sell 130 of the 530-odd stations that it would buy under its $1.8 billion plan, which has been on the boil for more than a year.

The ACCC intervened in December and said it would knock back the deal on the grounds that BP was not necessarily a ‘‘price leader’’ in the domestic fuel market.

BP had been carrying out the advisory work itself but it seemingly has bought in some assistance. Macquarie and Citigroup are reportedly providing some advice on an unofficial basis while King and Wood Malleson is doing the legal work.

Some observers say BP not using an adviser in the first place has hampered the process and dragged out the sale.

The question for BP now is whether to offer to sell more of the service stations, perhaps up to 200 sites, to appease the competition regulator.

A live option is taking on the ACCC in court, and BP is due to make that decision shortly.

Woolworths remains keen for a deal to go ahead, but stands to benefit either way. Given BP made a binding offer for the service stations, Woolworths will be paid a large break free if the deal is pulled by BP.

Woolworths currently operates 531 sites and has 12 sites in development. BP supplies fuel to about 1400 BP-branded service stations throughout Australia, setting fuel prices at roughly 350 of them.

The deal has dragged on for more than a year, as the ACCC raised its concerns about the impact on competition and petrol pricing if BP was able to get control of the Woolworths sites.

Woolworths and BP had been working with the regulator last year to alleviate its concerns by signalling that some of the Woolworths sites that posed the biggest threat to competition in local markets could be sold to other parties.

It is thought that BP would not be too concerned at selling up to 200 sites because the wholesale fuel supply agreements are more lucrative.

DataRoom understands that BP and its KWM lawyers are going back to 2003 to examine the ACCC versus AGL case that was fought out in the Federal Court. The regulator blocked AGL from taking a stake in the coal-fired power station Loy Yang but decision was later over turned by the Federal Court.

Woolworths is advised by Morgan Stanley and Clayton Utz.