LONDON, UK: Vitol Investment’s newly formed BidCo has signed an agreement to acquire the entire issued and to be issued share capital of Vivo Energy (excluding Vivo shares held by the existing Vitol shareholders) for $2.3 billion, a bourse filing said.
BidCo is a company indirectly owned by Vitol Investment Partnership II Limited (VIP II), an entity advised by employees of the Vitol Group. Under the terms of the offer, Vitol’s BidCo will pay $1.85 in cash for each Vivo Energy share.
The Vitol Group has engaged with Helios, another founding shareholder of Vivo, on various occasions over the past few years in relation to acquiring the Helios Entities’ 27.1 per cent interest in Vivo. Following a series of negotiations, BidCo and Helios agreed a price at which both parties would be willing to transact at a purchase price of US$1.79 per Vivo Share.
Fuels distribution and marketing in Africa remains a core activity for the Vitol Group. BidCo and the Vitol Group will continue to support Vivo’s management and its strategy, and believe that Vivo will benefit from Vitol’s expertise and be better placed to pursue opportunities in a highly fragmented market.
BidCo and the Vitol Group believe the cash value represents a significant premium for a UK publicly listed company, particularly in light of the 36.0 per cent. holding the Vitol Group already owns, at a value that minority shareholders are not likely to otherwise achieve in the near to medium term for an otherwise relatively illiquid stock.
Chris Bake, Head of Origination at Vitol, commented: “Since we founded Vivo with Helios and Shell, we have believed in the business’ potential and we are excited to have it within the Vitol family, as a pillar of our strategy in Africa. We are pleased that both Helios and the Independent Vivo Directors support our proposal.
We very much look forward to working with management on this next phase of growth and we thank Helios for their support and collaboration over the last ten years.”
John Daly, Chair of Vivo, commented: “Since Vivo Energy was established 10 years ago, the company has had a clear growth strategy and looked to deliver sustainable value for all its stakeholders. The Independent Vivo Directors believe that Vivo’s leading position in Africa means that it is well positioned to continue to capitalise on the opportunities that will arise from the fundamental growth drivers on the continent.
Vivo also demonstrated the strength of its business model through the impacts of the pandemic, with a rapid recovery in operational and financial performance, supported by committed leadership and employees who embody the unique Vivo culture.
This performance and strong financial position has enabled the business to deliver on its growth plans and allows the Independent Vivo Directors to consider its future and evaluate Vitol’s offer from a position of strength.
In considering Vitol’s various approaches, the Independent Vivo Directors recognise that Vitol and its concert parties already own 36.0 per cent of Vivo, and Vitol having secured agreement to acquire a further 27.1 per cent of the company from Helios, meant that the Independent Vivo Directors have been focused on evaluating the value of such offers and the impact of a transaction on wider stakeholders.
In securing the price available under the terms of the Offer, representing a near 19 per cent increase on the original approach in February 2021, and around a 72 per cent increase on the prevailing price at that time, the Independent Vivo Directors believe they have delivered a positive outcome for all stakeholders.
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.”