No time to check out (for Banducci) at Woolies

Sarah Thompson Anthony Macdonald Joyce Moullakis
Aug 12 2016
AFR
Woolworths chief executive Brad Banducci’s new motto must be “he who hesitates is lost.”
The former management consultant is wasting little time reshaping Woolworths’ business portfolio, flagging the sale of the EziBuy online business acquired by his predecessor only three years ago, searching for new corporate digs for BIG W and appointing bankers to find buyers for the $5 billion fuel retailing business.
As revealed by Street Talk on Thursday, US investment bank Morgan Stanley has won the mandate to sell the petrol stations, which are estimated to be worth between $1.3 billion and $1.5 billion.
ASX-listed Caltex Australia, Woolworths’ existing fuel partner, is the most logical buyer as it knows the business well and has big ambitions in convenience retailing.
Last year it bought back about 100 canopies from Woolworths and rebranded sites not operated by Woolworths as Star Mart.
Caltex could face serious competition from UK-based oil supermajor BP, which flew a group of executives to Australia in May to check out Woolworths fuel business, as also revealed by this column.
Other possible bidders include Puma Energy, which operates 405 sites and is now Australia’s largest independent fuel company, and Vitol.
Any transaction would come under scrutiny from the Australian Competition and Consumer Commission, which has kept a close eye on petrol prices and shopper dockets in the last few years.
Woolworths operates about 500 convenience stores under the Caltex brand, selling more than 4 billion litres of fuel per year. Sales at Woolworths petrol division were worth $5.63 billion in the 2014/15 financial year.
Coles Express and Woolworths each have about 24 per cent of the market, Caltex about 18 per cent and BP 13 per cent. If Caltex bought all the Woolworths sites its share would rise to 42 per cent while BP’s share would reach 37 per cent – a bridge too far for the ACCC.
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