Vivo Energy Seals Deal to Acquire Engen’s Operations in 8 African Countries

Vivo Energy has sealed a 20-billion-shilling deal to acquire South Africa’s Engen’s operations in eight African countries, including Kenya.

The deal, which was initially announced in December 2017 will see owners of Engen walk away with 6.3 billion shillings’ cash and a five percent shareholding in Vivo Energy. The transaction will substantially expand Vivo Energy’s footprint in Africa.

Vivo, which runs the Shell-branded outlets in the region disclosed that the transfer of Engen’s business would be completed by March next year.

Vivo currently has a presence in 15 countries following the acquisition of retail operations of Royal Dutch Shell in 2013. The firm retained the Shell brand for which it pays royalties to the Dutch oil major.

According to a statement from the oil marketing firm, Vivo Energy’s retail service station network will expand from 15 to 23 countries in Africa after completion of Engen’s Business transfer, which in turn will position them as the largest Pan-African independent network.

“As per the agreement on December 4, 2017 and as a result of the restructuring of the transaction, consideration in respect of the transfer of EIHL (Engen International Holding Ltd) is 20 billion shillings, comprising an issue by Vivo Energy of 63.2 million new shares valued at Vivo Energy’s IPO Offer Price of 165 pence per share and 6.2 billion shillings in cash, resulting in EHL holding a circa 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.” Read the statement.

The deal will, however, not translate to a major increase in the Kenyan market, with Engen having only 15 retail outlets, which translates to one percent market share.

The deal has been approved by the Competition Authority of Kenya, but on condition that it disposes of two of Engen’s petrol stations that are currently in close proximity to those that Vivo Energy runs. These are on Parklands Road and Enterprise Road, which CAK noted would bring about competition concerns due to Vivo’s presence in the areas.

The deal will add to Vivo’s network more than 225 Engen-branded service stations across 23 African markets.