The ACCC has rejected BP’s proposal to buy out Woolworth’s national portfolio of petrol stations – a deal worth nearly $1.8 billion, with funds speculated to be directed back into its retail family, including embattled discount retailer, Big W, who is in the last stages of a major restructure.
ACCC Chairman Rod Sims affirms that BP’s acquisition of Woolworths’ service stations will likely ” substantially lessen competition in the retail supply of fuel”.
Following the ACCC’s decision to block BP’s service station buy out, some market commentators speculate this may be the last roll of the dice for a Woolworths-owned Big W.
Some commentators speculate that Woolworths was banking on revenue received from BP’s acquisition, to further invest and uplift retail performance in Big W.
The Woolworths-BP acquisition deal has been in the works for more than a year.
Woolworths and BP have been working with the ACCC this year to address some of the regulator’s concerns, following questions about the impact of competition and petrol pricing.
Woolworths has voiced its disappointment with the ACCC’s decision, stating that it would be assessing its options in the forthcoming period.
The news follows some market commentators’ speculations that Woolworths could sell off Big W, following consecutive periods of losses and sluggish results.
For the first time in several quarters, Big W posted a turnaround in Q1FY2018, notching a 2.5% sales increase to $890 million.
A spokesperson for parent company Woolworths affirms that a customer-centric approach has been core to its turn around strategy:
“While it is still early days in our turnaround journey, the first key element in our plan was to regain price trust with our customers”
However, Big W admits it is still “very early” in its “multi-year turnaround journey”.
In its latest Annual Report, Woolworths disclosed that on 24th December 2016 it entered into a binding agreement with BP, to sell its 527 “fuel convenience sites” and 16 “committed development sites”.
For FY2017, Woolworths Group notched $4.68 billion in petrol sales, up 1.5% from last year.
In BP Australia’s 2015 net profit after tax rose to $670m, from $527m in 2014.
As mentioned in its latest Annual Report, Woolworth “classified” its ‘Petrol business’ as a “discontinued operation”.
