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Vivo Energy to complete acquisition of Engen by March 2019

By Moses Omusolo | Published Wed, September 19th 2018 at 11:43, Updated September 19th 2018 at 11:46 GMT +3

Oil marketing firm Vivo Energy has reached a deal to acquire Engen’s operation in eight African countries including Kenya for Sh20 billion.

Vivo, which runs the Shell branded outlets in the region, said the transfer of Engen’s business in to Vivo would be completed by March 2019.

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The deal, which was initially announced in December 2017, will see owners of the Engen walk away with Sh6.3 billion in cash and a five per cent shareholding in Vivo Energy.

The transaction will substanti ally expand Vivo Energy’s footprint in Africa. It has had a presence in 15 countries following acquisition of retail operations of Royal Dutch Shell in 2013. The firm retained the Shell brand for which it pays royalties to the Dutch oil major.

“On completion, Vivo Energy's retail service station network will expand from 15 to 23 countries in Africa, positioning it to become the largest pan-African independent network by a wide margin,” said the firm in a statement yesterday.

“As per the agreement on 4 December 2017 and as a result of the restructure of the transaction, consideration in respect of the transfer of EIHL is US$203.9 million (Sh20 billion), comprising an issue by Vivo Energy of 63.2 million new shares valued at Vivo Energy’s IPO Offer Price of 165 pence per share and US$62.1 million (Sh6.2 billion) in cash, resulting in EHL holding a circa five per cent shareholding in Vivo Energy. The cash element of the consideration will be funded by a draw down on Vivo Energy’s multi-currency facility, established in May 2018.”

The deal will however not translate to a major increase in market, with Engen having had only 15 retail outlets or one per cent market share. The deal has been approved by the Competition Authority of Kenya but on condition that it disposes two of Engen’s petrol stations that are currently in close proximity with those that Vivo Energy runs. 

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These are on Parklands Road and Enterprise Road, which CAK noted would bring about competition concerns due to Vivo’s presence in the areas.

The acquisition will add to Vivo’s network more than 225 Engen-branded service stations to Vivo Energy's network, taking its total presence to over 2,000 service stations, across 23 African markets.

“We look forward to welcoming around 350 new employees, adding eight new countries to our network, and increasing our target market by nearly 150 million people to around 35 per cent of the African population," said Christian Chammas chief executive Vivo Energy.

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