BP walks away from Woolworths service station deal

BP Australia says it has plenty of growth options after ending a two-year battle to buy 543 petrol stations from Woolworths.

Head of BP Australia, Andy Holmes, in their Docklands offices.

BP Australia chief Andy Holmes says there are plenty of growth options for the fuel company — including a bigger push into healthy food options and recharging stations for electric cars — after he walked away from its two-year battle to buy a portfolio of 543 petrol stations from supermarket giant Woolworths.

The British energy giant announced yesterday it would not continue with the proposed acquisition of Woolworths’ retail fuel and con­veni­ence business, originally struck in December 2016, as the deal couldn’t be structured to meet BP’s objectives in light of objections by the competition regulator.

The collapse of the deal also sweeps away a $1.8 billion payday for Woolworths, which was hoping to shed its petrol station arm and use the cash injection from the sale to improve its core supermarkets group, including store refurbishments and lowering prices to compete with arch-rival Coles and discounter Aldi.

Only seven months ago Mr Holmes vowed to escalate BP’s legal campaign to acquire Woolworths’ petrol stations after an informal merger proposal was opposed by the Australian Competition & Consumer Commission.

Yesterday, Mr Holmes told The Australian that litigation ultimately would prove to be too costly while the deal couldn’t be structured in a way that would make strategic sense for BP.

“On litigation we did look at it really hard but it was going to be very expensive and time-consuming, so we decided not to go that route and we did work a lot of other options with Woolworths, with other parties, to see if we could come up with a way to satisfy the ACCC requirements — which I still don’t agree with.

“We looked at it from all angles with the help of Woolworths and other people. And we realised it wasn’t possible.’’

Last year the ACCC said it intended to oppose the proposed acquisition by BP Australia of Woolworths’ network of retail service station sites, arguing the takeover would substantially lessen competition in the retail supply of fuel.

Mr Holmes said the decision did not deter BP Australia from its strategy to transform the retail convenience sector in Australia. “I am very confident in what the future holds and the delivery of BP’s strategy for strong market-led growth to 2021 with a continued focus on safe and reliable operations, increasing efficiency, simplification and modernisation.”

Mr Holmes said growth options for BP included partnering with local players to ramp up the quality and variety of services at its petrol stations, including its fresh food and convenience retail offer and digital services.

“On the digital side as well you could already see with the BPme in-car fuel payment app that we launched, we were first to launch in Australia, and that is innovating around digital, which is important to us and we are doing that around the world.’’ BP was also investing in electric vehicle recharging innovation such as super-fast recharging.

Analysts said Woolworths could find another buyer for its petrol station portfolio, which could include Caltex, demerge the business and float it in an IPO or keep the service stations.