- Woolworths is back to the start in its plans to sell off its petrol business.
- BP Australia just pulled out of the $1.8 billion deal.
- The supermarket chain says it’s now actively looking at alternatives.
BP Australia has dropped plans to buy petrol stations from Woolworths for $1.8 billion.
The supermarket group says it has been notified that BP will not continue with the proposed purchase.
“Woolworths Group is continuing to engage actively with alternative options for its Petrol business,” the company says.
The competition watchdog, the ACCC, in December decided to oppose the proposed sale on the grounds that it could lift petrol prices at the bowser.
Wooloworths had planned to use the cash to strengthen its balance sheet and reinvest in its core businesses.
Under the BP sale agreement, Woolworths and BP will equally fund the continuation of the 4 cents per litre discount for a minimum 10 years at the 527 Woolworths fuel and convenience sites.
Woolworths Rewards Members will be able to earn points on both fuel and in-store purchases as well as redeem points on purchases across BP sites.
Woolworths operates 531 sites and has 12 sites in development.
BP says it couldn’t find a way, despite its best efforts, to structure the deal to meet its strategic objectives.
“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,” says Andy Holmes, BP Chief Operating Officer, Asia Pacific.
“Our ambitions are underpinned by our long-standing strong relationships and partnerships. We are committed to working with our commercial partners, new and existing, to continue our transformational agenda for the integrated fuels value chain, and deliver innovation, technology and a best-in-class offer consumers expect.”
Caltex Australia last year also made a confidential offer to Woolworths for its fuel business. Caltex was the exclusive supplier of petrol and diesel to Woolworths with annual sales volumes of 3.5 billion litres a year.
Woolworths, which has been under increasing price competition from discount players, posted a 4.7% increase to $9.6 billion in sales for the third quarter, keeping the supermarket group well ahead of rival Coles in terms of growth.
For the latest half year, Woolworths posted a 37.6% rise in net profit after tax to $969 million.
Adjusted for earnings from fuel operation rose by 14.7% to $902 million.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.