SYDNEY, AUSTRALIA: Viva Energy Group has entered into a binding agreement to acquire the OTR Group for a total consideration of $1.15 billion from Peregrine Corporation.

The OTR network and wholesale fuel businesses will be acquired by way of share sale, while the SMGB business will be via asset sale.

The consideration will be funded through $1 billion of debt and working capital, and an equity component of $150 million to be issued to the sellers. The debt component will be funded through existing debt facilities plus bridging finance, with long-term debt facilities put in place over time.

Of the equity component, 50% will be escrowed for a 12-month period following completion and the remainder will be escrowed for a 24-month period. The number of shares issued to the sellers will be based around the 20-day volume weighted average price (VWAP) prior to signing the deal (subject to adjustments if the Company issues shares at a price lower than the VWAP in the period prior to completion).

Approximately 6,500 OTR team members and support centre staff will join the Viva Energy Group on their current terms and conditions. Viva Energy will retain the OTR head office in Adelaide which, along with the existing Melbourne-based team, will service the Group’s Convenience and Mobility business over time.

OTR Founder, Mr Yasser Shahin, will be retained by Viva Energy to support the existing OTR Group and transition the business to Jevan Bouzo, Viva Energy’s CEO of Convenience & Mobility. Their combined priorities will be to integrate the businesses, build the operating structure, further develop the OTR network, test formats for deployment into the Coles Express network and realise synergies.

Completion of the transaction is expected to occur in the second half of 2023, subject to customary FIRB and ACCC approval.

In the event that completion does not proceed, the parties have agreed to certain fall-back provisions for ongoing supply and the transfer of the commercial bulk fuels business (also subject to regulatory conditions) on commercial arms’ length terms.

The acquisition of the OTR Group business further delivers on Viva Energy’s strategy to grow high-quality, non-fuel earnings streams, and provides a significant opportunity to unlock procurement and supply chain synergies.

The acquisition of Coles Express, announced in September last year, secures operational control of the convenience business across more than 700 stores, together with the organisational capability and wholesale supply arrangements to support and execute the existing Coles Express offer.

The acquisition of the OTR Group secures leading convenience and quick service restaurant capability to rapidly deploy new formats across the network and further transform convenience and mobility business

Viva Energy’s CEO and Managing Director, Scott Wyatt, said today’s acquisition is transformational for Viva Energy and that OTR will become Viva Energy’s flagship convenience brand, replacing the Coles Express brand over time.

“The introduction of OTR’s superior convenience offering, including quick serve restaurants, will help revolutionise the diversity and attraction of our retail offering,” Mr Wyatt said.

“As our stores increasingly become retail destinations, we expect convenience earnings will grow and reduce our dependency on traditional fuels.”

“OTR outlets offer an attractive and welcoming store environment, supporting increased dwell time, which is likely to be a key factor in successfully introducing electric vehicle recharging facilities over time.”

Mr Wyatt said that over the past three decades the Shahin family has built OTR into one of the most successful integrated convenience and fuel offerings in Australia.

“We are excited about the opportunity we have to take this proud South Australian business and brand nationally and are pleased to have Yasser Shahin work with us as we commence this journey,” he said.

“We also look forward to welcoming approximately 6,500 OTR team members to the Viva Energy business, learning from them and working with them to lift the standard of convenience retailing in this country.”

OTR Founder, Mr Yasser Shahin, said, “Today’s announcement marks an incredibly exciting time for our company. This transaction delivers the realisation of the vision I have always had, and vigorously pursued; to see OTR become national, to be the leading convenience brand in Australia and to remain true to our roots and based in Adelaide.”

“The coming together of one of Australia’s best retail networks with one of Australia’s leading convenience offerings has enormous industrial logic,” he said. “I will continue to support the business following completion of the transaction, and the entire team and I are completely committed to the successful integration of these businesses. The Shahin family is committed to continuing to see Adelaide as the home of OTR and Viva Energy have provided for the realisation of a larger, enhanced OTR to continue to be headquartered here.”