BP take majority stake in Veba Oil
16 Jul 2001
BP announced today that it is to take a majority stake in Veba Oil, which owns Aral, Germany's biggest fuels retailer. The move could propel BP to first place in the German fuels market.
Subject to regulatory approvals, the deal - in the form of a joint venture between BP and Veba Oil's owner E.ON - involves BP taking 51 per cent and operational control of Veba Oil and offers the prospect of full ownership as early as the second quarter of next year.
In return, E.ON will receive 51 per cent of Gelsenberg - which holds BP's 25.5 per cent stake in Ruhrgas, Germany's leading gas distributor - plus a balancing cash payment of $1.63 billion, subject to adjustments, and an assumption by BP of $950 million of debt.
Terms have also been agreed which could result in BP transferring its remaining Ruhrgas stake and paying a further $340 million for the remainder of Veba Oil.
The cash cost to BP of acquiring all of Veba Oil could be significantly offset by proceeds from a re-sale of Veba Oil's upstream business, which produces 160,000 barrels of oil and gas equivalent a day. These proceeds would be shared with E.ON but with the bulk accruing to BP.
BP chief executive Lord Browne said the transaction would be immediately accretive to earnings and returns and, if BP acquired all of Veba Oil, should deliver annual synergies and savings of at least $200 million and greatly enhance future downstream growth in Europe.
Aral's domestic network of 2,560 retail sites has daily fuel sales of 170,000 barrels and 1.7 million customers a day in Germany.
Adding BP's existing German retail business would boost fuel sales to 230,000 barrels a day and shop revenues to over $2 billion a year, creating a market leadership position in fuels.
