Published: Thu, December 29, 2016
Health Care | By Gwendolyn Kim

Australia's Woolworths sells petrol chain to BP for $1.3 billion

Australia's Woolworths sells petrol chain to BP for $1.3 billion

The deal would preserve Woolworths' fuel redemption scheme, and would also trial a joint convenience store business at 200 BP petrol stations.

Under the deal, Woolworths, Australia's second-largest company by revenue, will sell its 527 owned fuel stations and 16 committed development sites to BP.

"The release of $1.785 billion from the sale will be used to strengthen our balance sheet and reinvest in our core businesses", Woolworths chief executive Brad Banducci said in a statement to the stock exchange.

The deal will also extend the Woolworths Rewards program and reward customers for loyalty and support.

The less points-savvy will also be able to redeem their Woolworths points as a discount on purchases at BP, in the same way as they can now do at a Woolies checkout and similar to the points-for-petrol option offered by Velocity. Caltex-being Woolworths' supplier-happened to be the under bidder for the deal.

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The two new partners have also agreed to develop a new convenience food offer called Metro at BP, which will draw on the Simply Food convenience store joint venture in the United Kingdom with Marks & Spencer. Those discounts will also be available at BP outlets, which Woolworths says means that there will be a convenient service station that accepts discount vouchers near 80% of its supermarkets (up from 75%).

BP Australia president, Andy Holmes said, "We are excited to bring BP's global expertise and success in food and convenience offers to Australia through this partnership with Woolworths". Caltex chief executive officer Julian Segal said in a statement that while the Sydney-based refiner and distributor is "disappointed that the successful fuel alliance will come to an end, it is important that we exercise financial discipline in pursuing growth".

The idea is modelled on similar BP partnerships with convenience store chains in Europe, including with Marks & Spencer in the United Kingdom and REWE in Germany.

It is expected to be completed in January, 2018, with Woolworths' existing Caltex co-branded sites continuing to operate until then.

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