Woolworths has appointed a veteran food and energy industry executive, Peter Hearl, as chairman of its $4.8 billion petrol business, suggesting the retailer is favouring an initial public offering rather than a trade sale.
It is understood that Mr Hearl joined the board of Woolworths Petrol late last month and will participate in presentations to potential investors during Woolworths’ non-deal roadshow, which kicks off in Sydney next week.
Woolworths has been pursuing options for petrol since June, when BP walked away from a $1.8 billion deal to buy the business after failing to overcome Australian Competition and Consumer Commission concerns.
Woolworths told investors at its full year results announcement last month it was looking at both a trade sale and an initial public offering and had received strong interest from trade players but there was also ‘strong momentum’ in the IPO process and it hoped to make a decision before Christmas.
The appointment of Mr Hearl, 67, who is now looking to appoint other non-executive directors to the petrol business, suggests Woolworths may be erring in favour of an IPO.
Mr Hearl has more than 30 years’ experience in the oil and gas and fast moving consumer goods industries and is credited with overseeing much of the growth of brands such as KFC, Taco Bell and Pizza Hut around the world.
Mr Hearl started his career with Esso Australia in 1973, leaving after 18 years to join PepsiCo Inc. He joined Yum! Brands in 1993 and held a variety of roles in Australia, Asia and the US, including chief operating and development officer for Yum! Brands globally, president of Pizza Hut Inc and regional vice-president for Asia-Pacific Yum! Restaurants including KFC.
Mr Hearl is believed to be close to Woolworths chairman Gordon Cairns, who ran Pepsico Australia in the 1980s and 1990s. Mr Hearl is currently on the boards of Telstra and Santos and was previously a non-executive director of Goodman Fielder and Treasury Wine Estates.
Mr Hearl and Woolworths Petrol’s senior management, led by chief executive James Goth and chief financial officer Paul Altschwager, are expected to brief potential investors next week on the group’s expansion plans, including growing the convenience retail offer and loyalty program, and its new alliance with Caltex.
Earnings from the petrol business, which has 534 sites and sells 3.6 billion litres of fuel a year, rose 7.1 per cent to $168 million in 2018 as sales rose 3.1 per cent to $4.8 billion.
Based on the current trading multiples of Viva Energy Group, which floated in July,and Caltex, the Woolworths Petrol business could be worth between $1.5 billion and $1.6 billion.
Woolworths, which is being advised by UBS and Morgan Stanley, has flagged further capital management when the sale or IPO had been completed.
Extracted from Australian Financial Review