Troubled supermarket group Woolworths has closed a $1.785 billion deal to sell its fuel business to BP.
The cash will be used to strengthen the Woolworths balance sheet and reinvest in its core businesses.
In early trade, Woolworths shares were up 2.2% to $24.41.
The Woolworths petrol business turned over $4.61 billion in the 2016 financial year, a fall of 18.1% on the previous 12 months.
Caltex Australia had 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.
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 CEO Brad Banducci says the deal is a win for Woolworths customers and shareholders.
“For our shareholders, once the strategic partnership is established, it will result in Woolworths having a larger platform for our redemption and reward program, as well as providing us with a unique opportunity to partner with and draw on BP’s success in rolling out market-leading convenience food offers globally,” he says.
The deal, subject to ACCC (Australian Competition and Consumer Commission) and Foreign Investment Review Board approvals, is expected to close by January 2.
In August, Woolworths posted a full year net loss of $1.23 billion, as the retailer exits the hardware industry, restructures and rebuilds its supermarket business.
The worse than expected loss was a stark contrast to the $2.146 billion profit of 2015.