Loblaw Cos. Sells Gas Station Network for $401M

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Loblaw Cos. Sells Gas Station Network for $401M

04/19/2017

BRAMPTON, Ontario — Loblaw Co. Ltd. has inked a deal to sell its gas station network to Brookfield Business Partners LP for approximately $401 million, or C$540 million.

The buyer, along with its institutional partners, will acquire 100 percent of Loblaw's gas station operations. The gas station network — one of the largest in Canada — includes 213 retail gas stations and associated convenience kiosks adjacent to Loblaw-owned grocery stores.

Loblaw put its gas station network on the market in June, as CSNews Online previously reported. The transaction is subject to customary closing conditions and is expected to close in the third quarter.

In addition, Brookfield is entering into an agreement with Imperial Oil to rebrand the gas station portfolio to the Mobil fuel brand. This will mark the introduction of the Mobil fuel brand in Canada.

The gas stations will continue to offer Loblaw's PC Plus loyalty program.

"In Brookfield we have a strategic partner with an experienced management team and a strong business track record," said Sarah Davis , president, Loblaw Cos. "They are committed to preserving and growing the elements of the business that matter most to our customers — high-quality fuel service and convenience along with PC Plus loyalty benefits. This is a positive outcome for our customers, our gas station operators, and our company."

Loblaw expects to use the proceeds for general corporate activities.

RBC Capital Markets is acting as financial advisor to Loblaw. Scotiabank is acting as financial advisor to Brookfield Business Partners.

"Our investment in Loblaw's leading portfolio of gas stations presents an opportunity to own a business with significant scale, strong customer loyalty, and compelling opportunities for further growth," said Cyrus Madon , CEO of Brookfield Business Partners. "This transaction aligns with our strategy of owning and adding value to high-quality businesses with solid long-term fundamentals in sectors we know well. We look forward to working with Loblaw to enhance and grow the current network of gas stations."

Brampton, Ontario-based Loblaw Cos. is a food and pharmacy leader in Canada, the nation's largest retailer, and the majority unitholder of Choice Properties Real Estate Investment Trust. It has more than 2,300 corporate, franchised and associate-owned locations.

Toronto-based Brookfield Business Partners is a business services and industrial company focused on owning and operating high-quality businesses that benefit from barriers to entry and/or low production costs.

PARKLAND & CHEVRON CANADA

The Loblaw-Brookfield deal is not the only one making fuel news north of the border.

Parkland Fuel Corp. has entered into an agreement with Chevron Canada Ltd. to acquire all of the shares of Chevron Canada R&M ULC, which operates its Canadian integrated downstream fuel business. 

The deal consists of three business segments: retail, commercial, and supply and wholesale. Subject to satisfaction of customary closing conditions, Parkland will pay approximately $1.1 billion, or C$1.46 billion, plus an estimated $186 million in working capital, according to the company.

Included in the acquisition are 129 Chevron-branded retail service stations principally located in Metro Vancouver, which complement Parkland's existing 44 Chevron-branded sites in British Columbia; 37 commercial cardlock and three marine fueling locations; and a complimentary refinery in Burnaby, terminals located in Burnaby, Hatch Point, and Port Hardy, British Columbia, and a wholesale business which includes aviation fuel sales to the Vancouver International Airport.

"This accretive acquisition further strengthens our supply-focused business model and adds significant scale with the premier Chevron retail brand and network in British Columbia," said Bob Espey, president and CEO of Parkland. 

"Parkland is acquiring a highly integrated business which adds significant supply infrastructure and logistics capability to support Parkland's existing operations. The refinery in Burnaby is an important asset to Metro Vancouver and British Columbia and we will continue to operate it with the capable and experienced professionals who manage the refinery today. We look forward to welcoming the Chevron team to our company, and to deepening our relationships in British Columbia," Espey added.

Parkland, one of North America's largest marketers of fuel and petroleum products, expects to close the transaction in the second quarter.