Supermarket giant Coles to sell fuel retailing business

Supermarket giant Coles is set to sell its fuel and convenience store business to Viva Energy for $300 million.

Viva Energy, which already supplies fuel to Coles, is the owner of the Shell service station chain in the country.

Under the deal, Viva Energy will acquire 710 Coles Express sites, giving it a bigger store network than archrival Ampol.

“Viva is well-placed to make the most of opportunities to grow the Express business into the future, while we will strengthen our focus on our … supermarket and liquor businesses,” Coles chief executive Steven Cain said on Wednesday.

As part of the partnership, Coles and Coles Express customers continue to enjoy customer offer and loyalty benefits across the network.

Coles customers will still be able to access its long-standing four cents per litre fuel discount and redeem Flybuys points at the petrol stations.

The sites will continue to trade under the Coles Express brand in the short-term, with all of the outlets to be rebranded within three and a half years.

“Our stations will continue to be branded Shell, but over the next few years our storefronts will be progressively rebranded to reflect our own identity combined and supported by a truly national supply chain,” said Scott Wyatt, Chief Executive Officer at Viva.

“We will clearly be the number-two player in both the fuel and convenience sector, which I believe gives us a compelling and strong competitive position to grow into the future,” Wyatt said.

The company expects to spend $120m to $140m over the next three years refreshing and rebranding stores and developing new IT systems.

All 6,000 Coles Express team members will be offered roles at equivalent terms with the new operator.

Coles said it expects to make a small gain on the offloading of the business, which generated sales of $1.1 billion and underlying earnings of $42m in the 2022 fiscal year.

Leases on the 664 store sites that Coles had rented from Viva Energy at a cost of $816m per year will revert to Viva.

The deal is expected to be completed in the second half of the 2023 financial year, pending regulatory approval.

At 11.07am AEST, Coles shares were flat at $16.75 while Viva shares were up 4.9 per cent to $2.76.

With news from AAP. Content has been edited for style and length.