Viva Energy Group Limited (Viva Energy) has completed the acquisition of the Coles Express Convenience Retailing business covering more than 700 stores nationally.
Together with the recently announced acquisition of the South Australia-based OTR group (subject to regulatory approval), this will see Viva Energy begin the transformation of its Retail Fuels business to become the leading convenience and mobility retailer in Australia.
“Today is an exciting day for Viva Energy,” says Viva Energy CEO of Convenience & Mobility, Jevan Bouzo. “The acquisition of the highly successful Coles Express Convenience business provides the foundation for Viva Energy to directly enter the fast-growing convenience market. We’re excited about the 6000 passionate and customer-centric team members joining our business today and we look forward to learning from each other and growing this business together.
“The convenience market has enormous potential for growth as customers seek a broader range of convenience, food and energy offers while they are on the move. The further acquisition of the OTR Group will secure a proven convenience offer which will complement and further extend our position in the convenience market,” Mr Bouzo said.
Viva Energy’s relationship with Coles has spanned 20 years, and while the Coles Express brand will eventually be replaced by OTR, customers will still be able to continue to redeem their Coles discount dockets and earn Flybuys points, he said. Coles will continue to provide product supply arrangements, including the Coles Own Brand product range and support the operation of the business through a Transitional Services Agreement.
Viva Energy CEO and Managing Director Scott Wyatt says, “We are delighted to bring together these two businesses to create Australia’s largest fuel and convenience network under a single operator, with more than 700 stores.”
“The transaction accelerates our plans to grow and transform our Convenience & Mobility business, while ensuring customers continue to enjoy the excellent customer service provided by the dedicated Coles Express team, the extensive product range in-store and the loyalty programs we know they love.”
Transaction overview
Viva Energy has paid a headline consideration of $300M to Coles Group (ASX: COL). The amount represents the approximate value of the assets being acquired, and is funded from cash.
The net impact is expected to be approximately $150 million after the settlement of existing arrangements and expected working capital benefits.
Strategic rationale
“By bringing forward the end of the Alliance agreement, Viva Energy has created Australia’s largest fuel and convenience network under a single operator, with a network of more than 700 stores in advantaged locations across the country. It has also accelerated plans to diversify earnings towards the attractive and fast-growing convenience industry,” the company said.
“Viva Energy has acquired an established and team-driven operating platform, and unlocked synergies from the integration of network and store development and the improved effectiveness of marketing and capital spend.”
The proposed acquisition of OTR Group, announced on 5 April this year, is the next critical step in the Convenience & Mobility transformation strategy.
