Vivo Energy has taken over operations of Engen Holdings in eight (8) African countries excluding Ghana, following the completion of the transaction.
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.
The transaction adds operations in eight new countries and 230 Engen-branded service stations to Vivo Energy’s network, taking its total presence to over 2,000 service stations, across 23 African markets.
As per previous announcements, consideration for the transaction comprises an issue by Vivo Energy of 63.2 million new shares and US$62.1 million in cash. The cash element of the consideration has been funded by a draw down on Vivo Energy’s multi-currency facility. Following the share issuance Engen will hold a circa 5.0% shareholding in Vivo Energy.
Commenting on the transaction, Christian Chammas, CEO, Vivo Energy said: “Today’s announcement opens an important new chapter for Vivo Energy, welcoming around 300 new employees, adding eight new countries to our network, and increasing our target market by almost 160 million to around 36% of the African continent.”
On the basis of information provided by Engen, Vivo Energy believes that the 2018 financial performance of the target Group will be similar to 2017. Increased fuel volumes, driven by the commercial segment, are expected to have been offset by lower margins. Vivo Energy will provide full year guidance for 2019, incorporating the 10 months of contribution of the new Engen markets, with its full year results announcement on 6 March 2019.
Chammas concluded: “In Vivo Energy’s first seven years we invested to grow our business, increasing our service station network and adding new and refurbished convenience retail and quick service restaurant offers.”
“We have an opportunity to replicate this successful business model to drive growth and profitability in our new markets. We must seize this in order to benefit all our customers, deliver value for our shareholders, and move closer to achieving our goal of becoming Africa’s most respected energy business,” he added.
Yusa’ Hassan, Managing Director and CEO of Engen commented: “Engen is excited to embark on this growth journey with Vivo Energy, and add another strong and well respected brand to the Vivo Energy Group.”
Following the transaction, EHL retains its interest in Engen Petroleum Limited (its South Africa business and refinery) and its businesses in Mauritius, Botswana, Ghana, Namibia, Swaziland and Lesotho, which are not part of the transaction. Engen’s business in the Democratic Republic of Congo (DRC) remains under evaluation by Vivo Energy, pending any agreement between Engen and the DRC Government regarding the transfer of the subsidiary holding Engen’s DRC interests.