- Fuel supplier Viva Energy Group (VEA) is set to acquire On the Run (OTR) Group for $1.15 billion to expand its non-fuel revenue streams
- The deal will increase Viva’s ownership of service station stores in Australia to over 1000, and is expected to immediately boost earnings in its convenience and mobility business by up to 50 per cent
- The acquisition will be self-funded through debt and equity issuance
- Viva Energy sees the acquisition as a “significant opportunity” in its strategy to become Australia’s leading convenience retailer
- VEA shares have climbed up 4.06 per cent, trading at $3.21 at 1:25 pm AEST
Fuel supplier Viva Energy Group (VEA) is set to acquire service station chain On the Run (OTR) Group for $1.15 billion, as part of the company’s aim to grow non-fuel revenue streams.
The acquisition will bring Viva’s ownership of service station stores across Australia to more than 1000, and comes after the company purchased Coles Express and its 700 stores in September last year.
VEA said the OTR purchase will immediately increase earnings in its convenience and mobility business by 30 to 50 per cent, reducing the company’s dependancy on income from fuels.
The acquisition will be self-funded through $1 billion of debt and working capital, and $150 million equity issuance to sellers, with 50 per cent of the equity component subject to a 12-month escrow period and the remainder subject to a 24-month escrow period.
OTR Group is a leading independent convenience retailer in Australia, generating over $3 billion of revenue annually and employing approximately 6500 people.
The OTR Convenience Retail network consists of 205 company-owned and controlled leasehold stores operating under the OTR brand, including integrated fuel and convenience stores as well as stand-alone stores.
The network also includes stores with quick-service restaurants operated by OTR.
OTR Founder, Mr. Yasser Shahin, will be retained by Viva Energy to support the existing OTR Group and transition the business.
“This acquisition is a significant milestone in Viva Energy’s growth strategy and supports our vision to be Australia’s leading convenience retailer,” Viva’s CEO Scott Wyatt said.
“The acquisition of OTR Group will provide us with cutting-edge capabilities, diversify our earnings, and accelerate the growth of our convenience business.
“We are excited about the potential of this acquisition and the value it will create for our shareholders.”
The transaction is still subject to regulatory approvals, including FIRB and ACCC.
VEA shares have surged 4.06 per cent, trading at $3.21 at 1:25 pm AEST.