Engen and Vivo Energy have announced their plans to merge their African operations, including Namibia, to form one of Africa’s largest energy distribution companies.
The combined group will have over 3,900 service stations and more than two billion litres of storage capacity across 27 African nations.
Under the terms of the deal, which is still subject to regulatory approval, PETRONAS will sell its 74% share in Engen to Vivo Energy at the completion of the transaction.
The Phembani Group, PETRONAS’s long-term African partner, and Engen’s B-BBEE shareholder, will remain invested as a 21% shareholder in the South African business.
“Vivo Energy’s focus has been to invest to grow our business, and I am proud that we have more than doubled the size of our network since our formation in 2011,” said Stan Mittelman, CEO of Vivo Energy.
“Completion of this transaction, which reunites the Engen brand across Africa, will be a step change in our growth and represents a significant commitment to the South African market while enhancing Vivo Energy’s portfolio in other important markets.”
The transaction will also benefit Engen employees through a newly implemented 5% employee share ownership programme, making Engen South Africa 26% owned by previously disadvantaged parties.
“This is an exciting opportunity for Engen to build on its market-leading position in South Africa and a number of southern African countries,” said Seelan Naidoo, Managing Director and CEO of Engen. “It allows us to leverage our strong brand equity, leading retail footprint, extensive supply chain capability, and unrivaled customer service to be a leading contributor to Vivo Energy and Vitol’s ambition to build a stronger and more successful pan-African energy champion.”
Vivo Energy currently operates and markets its products in countries across North, West, East, and Southern Africa. The group has a network of over 2,600 service stations in 23 countries, operating under the Shell and Engen brands, and exports lubricants to several African countries.
Engen, on the other hand, is an African-based energy group focused on the marketing of petroleum, lubricants, and other functional fluids, chemicals, and retail convenience offerings through its network of over 1,300 service stations across seven countries in sub-Saharan Africa and the Indian Ocean Islands.
“Vivo Energy has been a success story since its inception,” said Chris Bake, Chair of Vivo Energy. “Engen is South Africa’s market-leader and this powerful combination will benefit customers in South Africa and across the continent.”
Vivo Energy was advised by Rand Merchant Bank and Standard Bank, while Morgan Stanley and Rothschild & Co advised PETRONAS on the transaction.
