UK fuel retailers consider filling up at Woolworths Petrol

Sarah Thompson  Anthony Macdonald
Sep 25 2018
AFR

If there is one thing Woolworths CEO Brad Banducci doesn’t need to shout from the top of a mountain, it’s that his $2 billion-odd petrol business is for sale.

So perhaps we shouldn’t be surprised to hear there are some parties back sniffing around the petrol station portfolio, at the same time Woolworths Petrol’s management team has been spruiking the company to listed equities investors in early stage initial public offering marketing.

Street Talk can reveal UK-based DCC is one party taking a close look at the business.

 DCC is an acquisitive conglomerate that operates across global liquefied petroleum gas sales and marketing, transport and commercial fuel sales, healthcare and technology.

 The company sold 12.3 billion litres of fuel last year to 900,000 customers across its 1000-plus sites in Europe. It is listed in the UK with a £6.6 billion ($11.8 billion) market capitalisation and had reported £383 million operating profit last year.

It would be a newcomer to the Australian market – and the sort of face Australian Competition and Consumer Commission chairman Rod Sims would be only too happy to see arrive on these shores.

However, Woolworths’ petrol unit would be a big bite for the company. The unit has 534 sites and sells 3.6 billion litres of fuel a year, with $168 million in earnings last financial year. Sales were up 3.1 per cent to $4.8 billion.

 And it is understood DCC is not the only party conducting due diligence.

 Also said to be there is another British-based fuel and convenience retailer, EG Group, which is backed by investment firm TDR Capital.

It’s another fast-growing upstart and was formed two years ago via the merger of European Forecourt Retail Group, which had 1100 retail sites in Benelux and France, with Euro Garages, a leading forecourt retail business in the UK.

And then there are said to be some private equity types, with Woolworths’ advisers Morgan Stanley and UBS said to be offering to help finance a bid.

The interest comes about three months after Woolworths cancelled an earlier deal with oils major BP, after running into problems with the competition regulator.

 The supermarkets giant has since turned its attention to spinning the business off on to the ASX-boards.  It is understood Woolworths Petrol’s senior management, led by chief executive James Goth and Angus Armstrong wound up the American leg of a non-deal roadshow with fund managers last week.

Woolworths is expected to decide whether to go further with potential trade buyers – or the IPO – in coming weeks.