Merger between Engen, Vivo Energy to create new African energy giant
Energy distribution giants Engen and Vivo Energy have announced plans to merge their respective African businesses, creating one of the largest energy distribution companies on the continent.
The newly combined group will boast a network of over 3,900 service stations and storage capacity for over two billion litres across 27 African nations.
South African-based Engen, which already operates around 1,300 service stations in seven African countries, will retain its market-leading position in the country. Vivo Energy, which operates over 2,600 service stations across 23 African countries, uses the Engen and Shell brands.
As part of the merger, PETRONAS will sell its 74% share in Engen to Vivo Energy. The Phembani Group, a long-standing partner of PETRONAS and Engen’s B-BBEE shareholder, will continue to be invested as a 21% shareholder in the South African arm of the business.
The merger will also result in a 5% employee share ownership programme for Engen employees, bringing the business’s ownership by previously disadvantaged parties to 26%.
Stan Mittelman, CEO of Vivo Energy, stated: “Completion of this transaction… will be a step change in our growth and represents a significant commitment to the South African market whilst enhancing Vivo Energy’s portfolio in other important markets.”
Seelan Naidoo, Managing Director and CEO of Engen, added: “This allows us to leverage our strong brand equity, leading retail footprint, extensive supply chain capability and unrivalled customer service to be a leading contributor to Vivo Energy and Vitol’s ambition to build a stronger and more successful pan-African energy champion.”
The transaction is pending regulatory approval and the fulfilment of conditions precedent. Morgan Stanley and Rothschild & Co. are advising PETRONAS, while Rand Merchant Bank and Standard Bank are advising Vivo Energy.
