July 5, 2018 / 12:28 AM / in 9 months

Woolworths Group enters 15-year fuel supply deal with Caltex Australia

FILE PHOTO: Shoppers walk into a Woolworths supermarket in Sydney, Australia August 22, 2017. REUTERS/Jason Reed

(Reuters) - Woolworths Group Ltd, Australia’s largest supermarket operator, said on Thursday it entered a 15-year fuel supply deal with Caltex Australia Ltd, even as it continues to pursue an IPO or sale of its petrol business.

The firm will also start a wholesale food supply to over 700 existing Caltex convenience sites as part of the deal.

Thursday’s deal comes two weeks after Woolworths canceled a A$1.8 billion ($1.33 billion) sale of its petrol stations to BP Plc, after it was blocked by Australia’s antitrust regulator.

The grocer wants to exit the business to focus on supermarkets and said at the time of the deal being called off that it would pursue “alternative options” for the 527 petrol stations and 16 development sites, without giving details.

Woolworths on Thursday said it appointed James Goth, its director, corporate development, as the petrol business’s chief executive.

Woolworths Group CEO Brad Banducci said in a statement that while he was disappointed with the BP deal’s termination he felt the customer benefits of the Caltex alliance and the new fuel supply deal would help deliver a “compelling outcome” for customers and shareholders.

The regulator’s refusal in December to greenlight the proposed deal boosted BP rival Caltex, which stood to lose a major fuel supply contract with Woolworths.

Reporting by Aaron Saldanha in Bengaluru; Editing by Chris Reese

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