- Enters new 8 African markets
- Controls over 23 African markets
- Trades over 2000 branded fillings stations
- Shell to buy Engen SA and Nigeria
- Wants full control of African market
Multinational petroleum services provider, Vivo Energy, which trades under the Shell banner, has acquired all shares in Engen International Holdings Limited (EIHL), save for Botswana and the Democratic Republic of Congo (DRC).
The transaction, which was previously announced on 18 September 2018 has been completed, which will result in Vivo Energy acquiring 100 percent of Engen International Holdings (Mauritius) Limited. EIHL holds 100 percent of Engen’s operations in Kenya, Malawi, Mozambique, Reunion, Rwanda, Tanzania, Zambia. In Gabon and Zimbabwe, Engen has minority interests.
“It should be noted that Engen Holdings (Pty) Limited retains its interest in Engen’s Botswana business, which is not part of this transaction. It is only the nine markets listed above that are included in this transaction and that will transfer to Vivo Energy,” said Khumoyame Thuso, acting Corporate Communications Manager.
The transaction will be done in cash and equity. Vivo will pay $62.1 million in cash and issue 63.2 million shares to Engen under the revised terms of the deal. It will gain Engen-branded filling stations in Gabon, Kenya, Malawi, Mozambique, Reunion, Rwanda, Tanzania, Zambia and Zimbabwe. Engen will own about 5 percent of Vivo’s shares, according to a statement. The cash element of the consideration will be funded by a draw down on Vivo Energy’s multi-currency facility, established in May 2018.
Commenting on the transaction, 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 percent 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.”
The acquisition was made through Vivo Energy subsidiary, Vivo Energy Investments B.V.
All required regulatory and competition authorities’ approvals have been received for the transfer of Engen’s international operations in nine Sub Saharan countries, according to an announcement by Vivo.
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.
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 percent 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.
For the year ended 31 December 2017, unaudited management adjusted Earnings before interest, tax, depreciation and amortization (EBITDA), for the nine entities that will transfer on 1 March 2019 was approximately US$33 million, of which US$26 million is attributable, with attributable net cash on hand of approximately US$48 million.