Vitol, the world’s largest independent oil trader, is bringing its Africa-focused petrol business back inland through a £1.8 billion deal.
The privately owned company has reached an agreement to buy a 64% stake in Vivo Energy that it does not already own for 139p a share in cash, as it looks to a burgeoning market for its business. its core oil.
Vivo’s board says it plans to propose the offer. Shares of the company FTSE 250 rose 19% to 132.8 points. Investors will also receive a dividend of 6 cents a share
“Distribution and marketing of fuel in Africa remains the core business of Vitol Group,” the company said in a statement. “Vivo will benefit from Vitol’s expertise and be better positioned to pursue opportunities in a highly fragmented market.”
Vivo has a network of approximately 2,400 service stations in more than 20 countries in Africa that sell Shell and Engen branded fuels and lubricants.
It was born out of Shell’s African retail business in 2011. Vitol, the private equity group Helios Investment Partners and Shell ran the company as a joint venture before the two top shareholders bought it. Shell for $250 million in 2016.
The company rose to fame three years ago in London at 165p a share with Vitol selling for more than £300m. Earlier this month, Vivo’s longtime CEO Christian Chammas announced his plans to retire in 2022.
Takeover documents published on Thursday show Vitol offered 113p a share in February but the offer was rejected by Vivo’s board. It then made another offer in September and told the company that Helios had agreed to sell its 27.1% stake.
As Vitol already owns 36% of the company and will control a majority stake through the deal with Helios, Vivo decided to initiate discussions with the aim of negotiating “fair value for minority shareholders.” .
Vivo President John Daly said the nearly 19% increase in Vitol’s initial offer was a “positive outcome for all parties involved”.
Trafigura, one of Vitol’s main competitors, recently regained control of the struggling Puma Energy business.
Vitol is the world’s largest independent oil trader, handling more than 7 million barrels per day of crude and refined products.
The company and its rivals were among the biggest winners from last year’s pandemic oil prices fall.
Vitol reported net income of $3.2 billion, up from $2.3 billion in 2019, on revenue of $140 billion, the best performance since the company was founded more than 50 years ago. prior to. It also awarded $2.9 billion to its nearly 400 partners.
The company has spent $1 billion on US shale assets this year and has partnered with Pakistani oil broker Murtaza Lakhani to buy 5% shares in Vostok Oil, a giant Arctic oil project being developed by the Russian oil and gas corporation Rosneft.
But Vitol is also investing in renewable energy as the world moves away from fossil fuels. It has committed in excess of $1.1 billion to projects and has more than a gigawatt of renewable energy assets. Vitol also has a deep-water oil and gas project off the coast of Ghana.