Viva Energy is set to embark on a $250 million-plus revamp of its network of convenience stories and fuel stations to adapt them to the transitioning demands of its customers after wrapping up its $1.215 billion takeover of South Australia’s OTR Group.

Chief executive Scott Wyatt said the acquisition, announced last April, not only immediately provided Viva with 226 additional convenience stores but also offered the opportunity to take an extremely successful proven offer in South Australia and roll it out nationwide.

Viva, partly owned by commodities trader Vitol, owns the Shell-branded network of petrol stations.

Over the next five years, Viva will overhaul its existing network of Coles Express stores, refreshing and rebranding them under the “On the Run” name and with a stronger focus on food to suit the changing demands of customers and the gradual shift towards electric vehicles.

“It’s really about transforming our business from being a fuel retailer that happens to sell convenience to being a nationwide convenience and food retailer that happens to sell energy,” Mr Wyatt said.

“We’re trying to set ourselves up very much for pursuing what we see as a really exciting immediate growth opportunity in convenience but also set up our business to serve our customers as they transition to new energies over time.”

Longer at the servo

He said the more extensive convenience and food offer suited the trend towards EVs, where customers would be in stores for perhaps 30 minutes at a time as they charged their vehicle.

“The transaction just completed on is the starting point,” he said.

“We now plan to invest over $50 million a year over the next five years of additional capital to support the upgrading of stores across the country. Beyond that, we will also work with our landlord partners to also invest in sites and stores as well.

“The collective investment between us and our landlords is quite significant beyond the transaction completed on today and demonstrates the confidence we have in the strategy we are pursuing.”

OTR’s network includes 94 quick service restaurants including Subway, Guzman y Gomez, Krispy Kreme and Oporto, as well as shops such as Smokemart.

Wrapping up the deal with seller Peregrine Corporation comes after Viva pledged to sell 25 of its sites in South Australia to Chevron to secure clearance from the competition regulator. It got 13 Chevron sites in other states in return.

The acquisition is a critical part of Viva’s ambition to increase earnings in convenience and mobility beyond $500 million over the next five years.

Payment included equity of $150 million and $1.065 billion of debt.

Viva increased guidance for capital expenditure this financial year to between $490 million and $525 million to reflect the OTR assets. Transaction and integration costs are put at $120 million-$140 million through to 2026.

OTR founder Yasser Shahin, whose father started the business with just one petrol station in 1984, will work as a consultant to convenience and mobility CEO Jevan Bouzo for two years, with a focus on the expansion of the OTR offer across Viva’s network.

Extracted in full from:  https://www.afr.com/companies/energy/viva-fires-up-convenience-roll-out-after-locking-away-otr-20240328-p5ffxo

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