Vivo Energy completes Engen buy-out
September 19, 2018—Vivo Energy plc, marketers and distributors of Shell products in Africa, have through its subsidiary, Vivo Energy Investments B.V, taken over the operations of Engen International Holdings (Mauritius) in a shares and cash deal totaling $203.9 million completing a transaction first announced at the end of last year.
Vivo Energy shareholders are Vitol, Helios Investment Partners and Shell while Engen Holdings (Pty) Limited have been the owners of Engen International Holdings until this transaction.
Engen exited the Uganda market in 2012, but retained a regional presence in Rwanda, Kenya and Tanzania. In 2013 Vitol and Helios began to take over most of Shell’s service stations after buying out the Anglo-Dutch giant’s African downstream business in a one billion US dollar deal first publicised in early 2011.
In a statement issued on Tuesday, Christian Chammas, CEO, Vivo Energy said, “Today’s announcement opens an important new chapter for Vivo Energy and 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 pc of the African population. Importantly, our existing business remains on track to achieve our full year guidance and we continue to invest in and grow our existing operations.”
According to the statement, all required regulatory and competition authorities’ approvals have been received for the transfer of Engen’s International operations in nine sub-Saharan countries. The restructure allows for completion of the transaction, first announced on December 4, 2017, to proceed in respect of all countries other than the Democratic Republic of Congo. Completion has been scheduled for March 1, 2019.
The restructured transaction will add operations in eight new countries and over 225 Engen-branded service stations to Vivo Energy’s network, taking its total presence to over 2,000 service stations, across 23 African markets. The new markets for Vivo Energy are Gabon, Malawi, Mozambique, Reunion, Rwanda, Tanzania, Zambia and Zimbabwe. Engen’s Kenya operations (where Vivo Energy already operates) is the ninth country included in the transaction.
To pay for the acquisition, Vivo has issued 63.2 million new shares valued at Vivo Energy’s IPO Offer Price of 165 pence per share while $62.1 million is in cash, resulting in EHL receiving a five percent 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.
Yusa Hassan, Managing Director and CEO of Engen said, “Engen is pleased with this transaction, which will enable the parties to proceed to completion on 1 March 2019. It aligns with our growth aspirations in Africa. We look forward to becoming a Vivo Energy shareholder, and adding another strong and well respected brand to the Vivo Energy group.”
However Engen Holdings (Pty) Limited retains its interest in Engen Petroleum Limited (its South Africa business and refinery) and Engen’s businesses in Mauritius, Botswana, Ghana, Namibia, Swaziland and Lesotho, which are not part of the transaction.