(Bloomberg) -- A unit of Vitol Group agreed to acquire Petroliam Nasional Bhd.’s 74% stake in Engen Ltd., South Africa’s largest fuel-station chain, forming a retailer that spans the continent.
The acquisition by Vivo Energy of the controlling stake in Engen from the Malaysian national oil company will help the energy trader form a group with 3,900 service stations in 27 African nations, the companies said in a joint statement Thursday. They didn’t disclose financial details. The stake was expected to draw bids of about $2 billion, Bloomberg News reported last year.
“We’re looking at downstream opportunities because clearly it’s a good fit with the base business of what Vitol does,” Vitol Chief Executive Officer Russell Hardy said in an interview at Engen’s headquarters in Cape Town. “Africa being a growth continent and expected to have solid GDP growth and solid transportation growth makes it more of a target as compared to a country that’s likely to be full of Teslas in 10 years time.”
Petronas, which has been exploring options for a sale for some years, first acquired shares in Engen in 1996 and become its majority shareholder two years later. The company has about 1,300 service stations across seven African countries.
The acquisition “will be a step change in our growth and represents a significant commitment to the South African market,” Vivo’s Chief Executive Officer Stan Mittelman said in the statement. The company has more than doubled in size since its formation in 2011.
The merged companies will represent the second-biggest fuel retailer in Africa behind TotalEnergies SE, according to Mittelman. The French major has 4,700 stations, according to its website.
The companies’ CEOs declined to comment on the price of the deal.
Phembani, a South African investment firm founded by former MTN Group Ltd. Chief Executive Officer Phuthuma Nhleko, will remain a 21% shareholder in the South African business.
Morgan Stanley and Rothschild & Co. advised Petronas on the sale. Rand Merchant Bank and Standard Bank Group Ltd. advised Vivo.
--With assistance from Loni Prinsloo and Archie Hunter.
(Updates with CEO comment in third paragraph, network detail in sixth)
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