Completion of Transaction with Engen Holdings

Source Press Release
Company Vivo Energy 
Tags Corporate Deals, Deals, Refining & Marketing Activities
Date March 01, 2019
  • Vivo Energy’s retail service station network today expands from 15 to 23 countries in Africa, adding 230 service stations
  • Further opportunities in Commercial Fuels, Mining and Lubricants businesses
  • Vivo Energy increases its position as the largest pan-African independent fuels and lubricants retailer, by a wide margin

Vivo Energy plc (“Vivo Energy”) is pleased to announce the completion of the transaction with Engen Holdings (Pty) Limited (“Engen” or “EHL”), previously announced on 18 September 2018. The transaction adds operations in eight new countries and 230 Engen-branded service stations to  Vivo Energy’s network, taking its total presence to over 2,000 service stations, across 23 African markets. The new markets for Vivo Energy are Gabon, Malawi, Mozambique, Reunion, Rwanda, Tanzania, Zambia and Zimbabwe. Engen’s Kenya operations (where  Vivo Energy already operates) is the ninth country included in the transaction.

As per previous announcements, consideration for the transaction comprises an issue by Vivo Energy of 63.2 million new shares and US$62.1 million in cash. The cash element of the consideration has been funded by a draw down on  Vivo Energy’s multi-currency facility. Following the share issuance Engen will hold a circa 5.0% shareholding in Vivo Energy.

Commenting on the transaction, Christian Chammas, CEO, Vivo Energy said: “Today’s announcement opens an important new chapter for  Vivo Energy, welcoming around 300 new employees, adding eight new countries to our network, and increasing our target market by almost 160 million to around 36% of the African continent.”

On the basis of information provided by Engen, Vivo Energy believes that the 2018 financial performance of the target Group will be similar to 2017. Increased fuel volumes, driven by the commercial segment, are expected to have been offset by lower margins.  Vivo Energy will provide full year guidance for 2019, incorporating the 10 months of contribution of the new Engen markets, with its full year results announcement on 6 March 2019.

Yusa’ Hassan, Managing Director and CEO of Engen commented: “Engen is excited to embark on this growth journey with Vivo Energy, and add another strong and well respected brand to the Vivo Energy Group.”

Following the transaction, EHL retains its interest in Engen Petroleum Limited (its South Africa business and refinery) and its businesses in Mauritius, Botswana, Ghana, Namibia, Swaziland and Lesotho, which are not part of the transaction. Engen’s business in the Democratic Republic of Congo (DRC) remains under evaluation by  Vivo Energy, pending any agreement between Engen and the DRC Government regarding the transfer of the subsidiary holding Engen’s DRC interests.

Chammas concluded: “In Vivo Energy’s first seven years we invested to grow our business, increasing our service station network and adding new and refurbished convenience retail and quick service restaurant offers. We have an opportunity to replicate this successful business model to drive growth and profitability in our new markets. We must seize this in order to benefit all our customers, deliver value for our shareholders, and move closer to achieving our goal of becoming Africa’s most respected energy business.”

About Vivo Energy:

Vivo Energy operates and markets its products in countries across North, West, East and Southern Africa. The Group has a network of over 2,000 service stations in 23 countries operating under the Shell and Engen brands and exports lubricants to a number of other African countries. Its retail offering includes fuels, lubricants, card services, shops, restaurants and other non-fuel services (e.g. oil change and car wash). It provides fuels, lubricants and liquefied petroleum gas (LPG) to business customers across a range of sectors including marine, mining, construction, power, transport and manufacturing. Jet fuel is sold to customers under the  Vitol Aviation brand.

The Company employs around 2,700 people and has access to over 1,000,000 cubic metres of fuel storage capacity. The Group’s joint venture, Shell and Vivo Lubricants B.V., sources, blends, packages and supplies Shell-branded lubricants and has blending capacity per annum of around 158,000 metric tonnes at plants in six countries (Ghana, Guinea, Côte d’Ivoire, Kenya, Morocco and Tunisia).

Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd