Woolworths is rumoured to be a seeking a buyer for its 500 store network of petrol and convenience sites, understood to be worth between $1.3 billion and $1.5 billion.
Fairfax Media reports Morgan Stanley has been mandated by the supermarket giant to head the sale and has reportedly “reached out to interested parties” over the past few months.
It comes as Woolworths looks to restructure its business, having announced last month it was closing as many as 30 supermarkets, including four Woolworth Metro stores and axing 500 head office jobs as part of its cost-cutting measures.
Morgan Stanley declined to comment to C&I Week on the media reports, while a Woolworths’ spokesperson told C&I Week the company does not comment on industry speculation.
Sale to draw ACCC’s attention
Convenience sales grew 3.7 per cent in value in 2015, outperforming grocery which grew 1.2 per cent last year, while fuel sales volume in Australia rose 1.8 per cent in 2015, according to the Australasian Association of Convenience Stores (AACS) State of the Industry (SOI)report.
According to the AACS SOI report, Woolworths operated 518 petrol sites in 2015 (up from 508 in 2014), while Coles Express had 680 (up from 646 in 2014). Industry sources told C&I Week Caltex and BP are among the interested parties in Woolworths’ extensive petrol property portfolio.
BP was rumoured to be eyeing Woolworths’ service station network earlier in June this year, with reports circulating the oil giant had sent executives to Australia. However, a takeover by either fuel giants Caltex or BP Australia would draw the attention of the Australian Competition and Consumer Commission (ACCC).
In 2010 the ACCC blocked a bid by Caltex for the former Mobil service station network on the grounds of market domination. That blocking by the competition watchdog resulted in 7-Eleven buying most of the Mobil sites. When contacted by C&I Week Caltex Australia said it does not comment on market or industry speculation.
A source also told C&I Week Puma Energy Australia, which owns and operates 270 service stations, is another potential bidder for the Woolworths network, with the fuel retailer understood to be looking to build its presence in Australia and replicate similar store numbers in Australia like its European counterparts.
AACS: Industry landscape set for major shake-up
Jeff Rogut, CEO of the Australasian Association of Convenience Stores (AACS), told C&I Week a potential sale would be a “major shake-up” for the convenience industry.
“It appears Woolworths saw potential in convenience but it was more to satisfy the need for their customers to cash in their 4c shopper dockets than a real attempt at being serious convenience competitor compared to Coles, which has certainly spent a lot more and done a lot more work in their stores,” Mr Rogut said.
“If [a buyer] is a new player, or someone that’s not a dominant player in the Australian market, it will be a major shake-up. If they have sufficient backing and capital that could be re-invested in some [Woolworths] stores that haven’t had any major investment it would only add to the interest and credibility to the convenience channel. It is a tough retail environment but by all accounts we are still tracking ahead of supermarkets and general grocers.”
C&I Week contacted BP Australia and Puma Energy Australia for comment but did not respond prior to publication.