CALGARY C Imperial Oil Ltd. is getting from the retail gasoline business in a $2.8-billion deal announced Tuesday to divest all of its company-owned Esso stations.
The Calgary-based gas and oil company announced it was selling its remaining 497 Esso stations across Canada to numerous retail-focused gasoline distributors Tuesday.
Imperial has been steadily selling-off its fuel stations of which there are 1,700 across Canada, for quite some time.
Tuesday’s deal divides in the ownership from the company’s remaining 497 fill-up stations to various companies across Canada, including Alimentation Couche-Tard Inc., 7-Eleven Canada Inc., Harnois Groupe, Parkland Fuel Corp. and Wilson Fuel Co.
“We believe these agreements represent the easiest way for Imperial to develop within the highly competitive Canadian fuels marketing business,” Imperial president and CEO Rich Kruger said in a release.
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Imperial owns and operates upstream oil and gas wells, oilsands projects and downstream refineries. The organization continues to sell the oil it creates and refines with the network of Esso stations, even though it will no longer own or operate those stations.
The stations sold for substantially more money than many analysts had predicted.
Analysts at RBC Capital Markets valued the deal between $500 million and $1 billion, while CIBC World Markets analysts expected the Esso stations to fetch between $800 million and $1.2 billion.
BMO Capital Markets analyst Randy Ollenberger said in an email that the Imperial received a “great price. A lot higher than I was expecting.”
“It’s an indication that these distributors share our confidence in the Esso brand,” Imperial spokesperson Killeen Kelly said from the deal’s $2.8-billion value.
She added that every individual deal will have to go through the Competition Bureau and would close at a staggered pace with the end of 2016.
‘We believe these agreements represent the best way for Imperial to grow within the highly competitive Canadian fuels marketing business’
Laval, Quebec-based Alimentation Couche-Tard bought over fifty percent from the stations sold Tuesday, purchasing 279 stations in Ontario and Quebec for $1.6 billion.
Couche-Tard president and CEO Brian Hannasch known as the deal a “transformative acquisition” and said inside a release, “the sites we would acquire represent an excellent strategic fit for our business, allowing us to grow our network and reach more fuel customers than in the past.”
Red Deer, Alberta-based Parkland Fuel Corp. bought 17 Esso stations in Saskatchewan and Manitoba. “This is a tremendous opportunity for us to develop a number one convenience store brand in Canada,” Parkland’s vice-president of retail, Peter Kilty, said in a release.
Parkland also bought the franchise agreements for Imperial’s 80 On the Run and March Express fuel stations across Canada.
Financial Post with files in the Calgary Herald
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