Vivo wraps up Engen deal for Sh20 billion
1 months ago, 19 Sep 00:07
.[Photo David Gichuru]
Oil marketing firm Vivo Energy has reached a deal to acquire Engen’s operations in eight African countries, including Kenya, for Sh20 billion.
Vivo, which runs the Shell-branded outlets in the region, said yesterday the transfer of Engen’s business would be completed by March next year.
The deal, which was initially announced in December last year, will see owners of South Africa’s Engen walk away with Sh6.3 billion cash and a five per cent shareholding in Vivo Energy. The transaction will substantially expand Vivo Energy’s footprint in Africa. It currently has a presence in 15 countries following the acquisition of retail operations of Royal Dutch Shell in 2013. The firm retained the Shell brand for which it pays royalties to the Dutch oil major.
“On completion, Vivo Energy’s retail service station network will expand from 15 to 23 countries in Africa, positioning it to become the largest pan-African independent network by a wide margin,” said the firm in a statement yesterday.
“As per the agreement on December 4, 2017 and as a result of the restructure of the transaction, consideration in respect of the transfer of EIHL (Engen International Holding Ltd) is $203.9 million (Sh20 billion), comprising an issue by Vivo Energy of 63.2 million new shares valued at Vivo Energy’s IPO Offer Price of 165 pence per share and $62.1 million (Sh6.2 billion) in cash, resulting in EHL holding a circa five per cent shareholding in Vivo Energy. The cash element of the consideration will be funded by a draw down on Vivo Energy’s multi-currency facility, established in May 2018.” The deal will, however, not translate to a major increase in the Kenyan market, with Engen having only 15 retail outlets or one per cent market share.
The deal has been approved by the Competition Authority of Kenya, but on condition that it disposes of two of Engen’s petrol stations that are currently in close proximity to those that Vivo Energy runs. These are on Parklands Road and Enterprise Road, which CAK noted would bring about competition concerns due to Vivo’s presence in the areas. The deal will add to Vivo’s network more than 225 Engen-branded service stations across 23 African markets.
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