Viva Energy completes $1.2 billion acquisition of OTR

Viva Energy has announced the completion of its $1.2 billion acquisition of OTR Group, which consists of a network of 226 stores.

The acquisition will see Viva leverage OTR’s convenience and quick service restaurant (QSR) offering to advance Viva’s strategy to transform into a leading convenience and mobility business.

OTR Group currently consists of a network of 226 stores, comprising 195 fuel and convenience stores and 31 stand-alone stores, of which 42 are located outside South Australia. The business also has leasehold rights to a growth pipeline of 85 sites across the country, which will be developed into new OTR stores over the next few years.

Scott Wyatt, CEO and Managing Director of Viva Energy, said the announcement marks a critical step forward in the Convenience & Mobility business’ ambition to grow earnings beyond $500 million over the next five years.

“Having completed the OTR Group and Coles Express acquisitions, we will extend our world-class convenience retail offering across the largest company-operated network in Australia, with a pathway to more than 1,000 stores.”

Viva believes that as electric vehicle penetration grows over the next two decades, a larger proportion of earnings from a high-quality convenience offering and frequent visits to its stores will create advantages over competitors.

In CY2023, the OTR fuel and convenience network generated sales growth of five per cent (17 per cent excluding tobacco), non-fuel sales of $3.9 million per store on average, well above Viva’s network at $1.6 million, as well as a gross margin of 40 per cent, again well above Viva’s network at 34 per cent.

Within the network, there are also 94 QSRs, of which 75 are fully integrated under the same roof as the convenience offering. It also has the Smokemart and Giftbox (SMGB) network, which provides tobacco wholesale arrangements to OTR and other retail third-party networks, with 278 company-owned and controlled leasehold stores across Australia, together with an online retail portal.

OTR Group has a scalable convenience offering with a 24/7 network of stores as well as a highly engaged digital experience, with 13 per cent of fuel purchases and 43 per cent of coffee purchases involving an in-app purchase or in-store scan this year.

In September 2022, Viva acquired the Coles Express network of 710 sites, and plans to transition the network over to OTR, combining the best of the Coles Express and OTR digital and loyalty offers into one compelling customer proposition.

To support alignment with strategic objectives and financial outcomes, the Board has approved a one-off five-year incentive, at a maximum of $6.5 million, for Jevan Bouzo that will replace his LTI entitlement as CEO of Convenience and Mobility for the next five years (2024-2028).

Yasser Shahin, Founder of OTR, will be retained by Viva as a consultant for two years and, in addition to supporting Bouzo, will be focused on the roll-out of the OTR offer across Viva’s company-controlled network.

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