Viva Energy has completed its $300 million acquisition of the Coles Express fuel and convenience retailing network, as the once traditional oil refiner accelerates its push into grab-and-go shopping.
The deal, in which Viva takes ownership of 700 convenience stores, is a key pillar in chief executive Scott Wyatt’s plan to reposition the company amid a rise in electric vehicles that threatens to change the way households charge their cars.
Coles Express has until now been operated under an alliance between Viva and Coles, which has been restructured over the years to increase Viva’s influence.
The profitability of Coles Express peaked at about $200 million. A turning point arrived in 2013 when Coles and Woolworths were forced to stop offering large fuel savings offers on grocery dockets after an investigation by the competition regulator. These discounts are now limited to 4¢ a litre..
“The acquisition of the highly successful Coles Express convenience business provides the foundation for Viva Energy to directly enter the fast-growing convenience market,” said Viva Energy chief executive of convenience and mobility, Jevan Bouzo.
“The convenience market has enormous potential for growth as customers seek a broader range of convenience, food and energy offers while they are on the move.”
OTR generates more than 70 per cent of its earnings from non-fuel retailing. Should the deal complete, Viva’s share of earnings from non-fuel rises to 50 per cent, up from 30 per cent at present.
Viva is planning a clean fuels hub at its Geelong refinery site, but its plans for an LNG import terminal have hit regulatory and policy delays, and other projects there have a longer timeframe.