Engen and Vivo Energy have announced plans to merge their respective African businesses to create one of Africa’s largest energy distribution companies.
The combined group will have over 3,900 service stations and more than two billion litres of storage capacity across 27 African countries.
Engen is the clear market leader in South Africa and has around 1,300 service stations across seven African countries.
Vivo Energy is a major pan-African retailer and distributor of fuels and lubricants to retail and commercial customers, with over 2,600 service stations across 23 African countries, using the Engen and Shell brands.
The Phembani Group, PETRONAS’ long-standing partner in Africa and Engen’s B-BBEE Shareholder, is continuing its strong association with Engen and will remain invested as a 21% shareholder in the South African business. PETRONAS will sell its 74% shareholding in Engen to Vivo Energy at completion.
The transaction will further benefit employees of Engen through a newly implemented 5% employee share ownership programme, resulting in Engen South Africa being 26% owned by previously disadvantaged parties.
Stan Mittelman, CEO of Vivo Energy indicated that the purpose of the company is to grow its asset base and to make the company one of the best in the sub region.
“Vivo Energy’s focus has been to invest to grow our business, and I am proud that we have more than doubled the size of our network since our formation in 2011. Four years ago, we acquired the Engen business in nine African markets, and have since worked to enhance and develop these. Vitol’s acquisition of 100% of Vivo Energy last year brings more opportunity to grow even faster.
“Completion of this transaction, which reunites the Engen brand across Africa, 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.”
Stan Mittelman
Engen to Build on its Market Leading Position
Seelan Naidoo, Managing Director and CEO of Engen on his part said, “This is an exciting opportunity for Engen to build on its market leading position in South Africa and a number of southern African countries”.
“It 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.
“Engen is excited to become part of the enlarged business and this will set up our business to be stronger and more successful than ever before.”
Seelan Naidoo
Phuthuma Nhleko, Chairman and Co-founder of Phembani Group also said the Phembani Group is proud to have been a long-term shareholder in Engen since 1999, partnering with PETRONAS and helping to grow Engen into a valuable South African corporate citizen, meeting the needs of millions of ordinary South Africans.
“We are pleased to partner with Vivo Energy in the next phase of Engen’s growth. We are confident that together we will support Engen’s continued growth, enabling it to realise its vision.”
Phuthuma Nhleko
Chris Bake, Chair of Vivo Energy noted that Vivo Energy has been a success story since its inception. It has grown consistently, both organically and by investing in modern quality assets.
“It has a highly professional and capable management team with a deep understanding of Africa’s unique energy requirements. Engen is South Africa’s market-leader and this powerful combination will benefit customers in South Africa and across the continent.”
Chris Bake
Meanwhile, the transaction is currently pending regulatory approvals and fulfilment of conditions precedent. Rand Merchant Bank (a division of FirstRand Bank Limited) and Standard Bank advised Vivo Energy. Morgan Stanley and Rothschild & Co are advisors to PETRONAS on this transaction.
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