Oil trading giant Vitol will buy Britain’s Vivo Energy in a deal valued at roughly $2.3 billion, as Vitol looks to take full ownership of Vivo and Engen-branded fuels in Africa.
With a network of roughly 2,330 service stations across Africa, Vivo’s shares climbed up by as much as 21 per cent to 134.8 pence, quite below the total offer of about 139 pence.
Vivo’s shareholders will receive $1.70 in cash for each share they hold, and six cents as an interim, in addition to a special dividend to be awarded them.
With Vitol-Netherland being the top Vivo investor with a 36.1 per cent stake, the company will also buy out Helios, the second biggest shareholder.
Vivo was founded after Shell divested some of its downstream business in 2011. It now has a strong growing presence in Africa with service stations spread across 23 markets across the continent.
Over the past 20 years, Vitol has significantly expanded its scale and scope through the acquisition of assets. Vitol now owns a significant number of assets across the energy value chain worldwide, including more than 480,000 barrels per day of refining capacity and 100 million barrels of terminalling and storage assets.
More recently, Vitol has begun reviewing its business in the context of the energy transition. To date it has committed over US$1 billion of capital to renewable projects and is expanding its presence across the sustainable energy spectrum in both developed and developing markets.
Vitol, Helios and Shell operated Vivo as a joint venture before the two top shareholders bought out Shell for $250 million in 2016.
Vivo’s Long-term Growth Supports Profitability
Vitol had previously engaged with Helios in recent years to buy Helios’ 27.1 per cent stake. The duo agreed on the purchase price of $1.79 per Vivo share, which represents a premium of about 25 per cent at the close of stock on Wednesday, November 24, 2021.
Vitol’s Head of Origination Chris Bake said: “Since we founded Vivo with Helios and Shell, we have believed in the business’ potential and we are excited to have it within Vitol family, as a pillar of our strategy in Africa. We are pleased that both Helios and the Independent Vivo Directors support our proposal.”
Vitol’s offer on Thursday, November 25, 2021 follows a lower-than-expected offer price ($1.55 per Vivo Share) in February 2021, which was subsequently rejected by the company’s board. The new offer price represents a 72 per cent increase on the prevailing price presented in the February proposal.
John Daly, Vivo’s Chairman said: “The offer from Vitol represents an attractive value in cash for Vivo Shareholders, and Vitol’s proven track record of supporting Vivo’s long-term growth plans will support Vivo in continuing to deliver benefits to its wider stakeholders.”
Vivo’s business operations, although hit by the COVID-19 pandemic, performed well with shares reaching more than 50 per cent so far this year. This demonstrates the strength of Vivo’s business model throughout the impact of the pandemic upon which standpoint Vitol’s purchase is hinged.
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