Woolworths has confirmed one of the worst-kept secrets in retailing, that it is likely to sell its petrol retailing arm, with a number of offers on the table.
The retailer said it is “currently evaluating whether to retain or dispose of its petrol business”.
“Woolworths has received incomplete and conditional proposals from a number of parties in relation to the purchase of the business and the development of an enhanced convenience and loyalty offer to its customers.”
Supplied by Caltex, Woolworths operates 530 petrol stations across the country, a number of which also include convenience stores.
Caltex has made little secret of its desire to buy the business, confirming its interest when releasing its results last month.
“It’s clear we’ve had a good relationship with Woolworths since 2003 and would like to continue that relationship,” Caltex chief executive Julian Segal said last month. “If the petrol business is for sale, we would naturally be interested in it.”
Caltex supplies all 530 of Woolworths petrol stations. Photo: Daniela Sunde-Brown
In the year to June, Woolworths generated $4.6 billion in sales from its petrol stations, due to a decline of 2.4 per cent in the underlying volume of petrol sold. Sales were also hurt by a rejigging of its tie-up with Caltex, which resulted in 131 Caltex-operated sites being excluded from Woolworths numbers.
Woolworths said it is in discussions with a number of interested parties.
“No decision in relation to the future of the business has been made, and Woolworths wishes to advise that current discussions may not result in a transaction,” it said in a statement to the stock exchange.
The sale had been expected to follow the winding up of Masters, Woolworths’s disastrous foray into hardware retailing with US partner Lowe’s, as the group’s newly installed chief executive Brad Banducci seeks to focus the group on its core supermarket operations.
Selling off the hardware unit is expected to result in net proceeds of $500 million, with Masters due to cease trading by early December.
Market speculation has centred on Woolworths finalising the sale of the petrol unit by year end, although potential competition concerns may slow finalising any purchase since the Australian Competition and Consumer Commission would need to approve a deal, depending on the buyer.
It is believed that Woolworths is keen to maintain its 4c a litre discount offering for its customers along with its loyalty programs which could complicate any deal, especially since it is keen to continue to participate in the convenience store market.
Caltex has been approached for comment.
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