RHIANNON HOYLE
July 5, 2018
Dow Jones
Woolworths has signed a new strategic alliance and 15-year wholesale fuel supply agreement with Caltex Australia, but it will continue to pursue an initial public offering or sale of the petrol station business.
The arrangement comes two weeks after oil giant BP axed a proposed deal to buy Woolworths’s petrol stations after regulators indicated they would oppose the deal.
Woolworths (WOW) said 125 Caltex (CTX) sites would be added to its 638-site network of petrol stations where consumers can cash in fuel redemption offers from the Australian supermarket chain.
Woolworths will also start a long-term wholesale food supply to more than 700 existing Caltex convenience sites and said a new long-term fuel supply deal will lock in “a market competitive cost of fuel that is expected to deliver a significant and sustainable earnings uplift to the Woolworths Petrol business.”
The grocer said Caltex will also make a one-off payment of about $50m to Woolworths, and estimated the fuel deal would give it a pre-tax benefit of more than $80m a year.
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