Ampol is set to acquire EG Group’s Australian fuel and convenience business for about A$1 billion, ending almost 18 months of protracted negotiations. The deal, advised by UBS, will see Ampol take control of the 540-site portfolio EG purchased from Woolworths in 2018 for A$1.7 billion.
The agreement marks a significant step in EG Group’s strategy to reduce its US$5.3 billion net debt, accumulated during an aggressive acquisition spree that expanded its global network to more than 6,000 sites. The company has been under pressure from falling pre-tax profits, which plunged from US$1.4 billion to US$10 million last year, and has recently moved to divest non-core assets, including the sale of its Italian business for €225 million.
Founded by brothers Mohsin and Zuber Issa, EG Group had been reluctant to lower its price expectations, but deteriorating market conditions and the need to strengthen its balance sheet have driven the sale. The company is also considering the sale of its US business and a potential £13 billion US listing.
Ampol, an underbidder for the assets in 2018, is expected to face competition regulator scrutiny and may need to divest some sites. The acquisition comes as the company weighs its future in a shifting energy landscape, with electric vehicles prompting a need to diversify beyond fuel sales.