Viva Energy is a step closer to creating the nation’s largest fuel and convenience store network after it announced on Friday that two of Australia’s key regulators had given the green light to its acquisition of Coles Express.
The $300m deal, announced in September last year, will create a group with 710 sites nationally, with Viva to phase out the Coles Express branding over the next three and a half years.
Viva told the ASX on Friday that both the Foreign Investment Review Board and the Australian Competition and Consumer Commission had signed off on the deal.
The new sites being acquired turned over more than $1.1bn in convenience store sales in FY21, and Viva said at the time the deal was announced that it was expected to add between 11 and 18 per cent to earnings per share, or $45-$70m in EBITDA.
Transaction and integration costs were expected to run to $120m-$140m.
“Coles Express will be transitioned and operated as an independent business unit within the Viva Energy group,’’ Viva told the ASX last year.
“The new business unit will bring together existing retail capacity from both Coles Express and Viva Energy to establish a highly-focused and capable retailing organisation that will lead the company’s broader fuel and convenience strategies.’’
Viva had an alliance agreement with Coles to transfer the Coles Express business to Viva upon its expiry in 2029 however decided instead to accelerate that process.
“As a result of the transaction, Viva Energy will be better positioned to optimise and improve the business and pursue both fuel and convenience growth which will drive future retail earnings,’’ Viva said in announcing the deal.
“Over time, synergies are expected from the integration of the network and store development and improved effectiveness of marketing and investment spend.’’
Viva last week reported strong fourth quarter operational figures, with group fuel sales across retail and commercial up 12.9 per cent over the corresponding period the previous year to $3.78bn.
The Coles Express deal remains subject to closing conditions with Coles Group and Viva told the ASX on Friday it was expected to complete in the second quarter of this calendar year.
Viva Energy shares closed up 0.7 per cent, or 2c each at $2.96 on Friday, defying a fall of 1.8 per cent across the broader energy sector.
Theo Foukkare is available for interview on 0423 003 133
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