Chevron will spend $425 million to acquire Puma Energy’s Australian business in a surprise move to re-enter the fuels retailing market in Australia only four years after exiting it through the $4.6 billion sale of its half-share of Caltex.
Puma, one of the country’s largest independent fuel retail chains, owns a network of about 360 retail fuel sites around Australia, 222 shops and dozens of cafes and truck stops.
The assets, put on the block by Puma owner Trafigura, were being pitched through Bank of America Merrill Lynch with about $50 million of earnings before interest, tax and depreciation and expected to raise about $450 million, The Australian Financial Review‘s Street Talk column reported in September.
“The acquisition will provide Chevron with a stable market for production volumes from our refining joint ventures in Asia and create a foundation for sustainable earnings growth,” Mark Nelson, Chevron’s executive vice president for Downstream & Chemicals, said in a statement from San Ramon, California.
Puma chief executive Emma FitzGerald said the sale, which excludes the bitumen business in Australia, reflected the company’s commitment to “optimise our global portfolio and deleverage our balance sheet” by the end of 2020.
“This follows the sale of our business operations in Indonesia and Paraguay, enabling us to pay down our debt and ensure we’re focused on those markets which will drive growth as part of our customer-focused five-year strategy,” she said.
The deal, due to close in mid-2020 subject to regulatory approvals, allows Chevron to retain use of the Puma Energy brand although the US company has yet to decide whether to do so.
The sale adds to the upheaval in the petrol and diesel retailing sector in Australia, where Woolworths recently sold its network to UK-based EG Group for $1.73 billion and Canadian convenience retailer Alimentation Couche-Tard is pursuing an $8.6 billion takeover of Caltex.
Puma only entered Australia in 2013 when it bought Archer Capital’s Ausfuel, along with Neumann Petroleum and Central Combined Group.
That was followed by more movement with Shell selling its Geelong refinery and its petrol stations to trader Vitol. That business has since been listed as Viva Energy, selling fuel through its Shell-branded network and an alliance with Coles.
Puma Energy has 3 per cent to 4 per cent of the Australian fuel retailing market, according to data firm IBISWorld, trailing Coles (13.9 per cent), Caltex (12.6 per cent), Woolworths (now EG Group, 11.5 per cent), 7-Eleven (6.7 per cent) and BP (5.4 per cent). It delivers over 1 billion litres of fuel a year.
“The Puma Energy fuels business in Australia is subscale in relation to the market and has been under competitive pressure,” a spokesman said.
“We want to focus our efforts to drive growth on those markets where we have scale and can make a real difference.”
The deal brings to an end Chevron’s absence from the fuels retailing sector since it sold its half-share in Caltex Australia in March 2015. That sale, Australia’s biggest ever block trade of shares, contributed to the US player’s target at the time to sell an extra $US5 billion ($7.27 billion) of assets.
“Our divestment in 2015 was aligned with our global asset sale commitment at the time to return cash to Chevron,” said the Perth-based spokeswoman.
“As part of our refining and marketing value chain approach, Chevron’s intent is and has always been to place its refined products in desired markets, and Australia fits the profile.”
Chevron is already one of the biggest foreign investors in Australia through its $US54 billion Gorgon LNG project, its $US34 billion Wheatstone LNG venture and its stake in the North West Shelf venture.
Extracted from AFR