The ongoing sale process for 7-Eleven has led many to believe that Ampol might not be pursuing a bid any longer, even though they haven’t officially withdrawn.
Private equity company Platinum Equity, known for its undervalued offers, remains in the race, says an insider. However, there seems to be a pricing disagreement between them and the current owners, the Withers and Barlow families.
Another key player is Seven & I Holdings, the entity that operates 7-Eleven stores in Japan, believed to have first rights to the deal.
There’s speculation that the sale is primarily to gauge market valuation and ensure Seven & I Holdings stays transparent in its intent. After announcing their half-yearly results in August, Ampol’s leadership hasn’t brought up the sale in any investor interactions.
UBS, Ampol’s financial advisors, don’t seem to be actively negotiating any deal.
For Ampol, successfully acquiring 7-Eleven appears challenging. Some say obtaining the green light from the Australian Competition & Consumer Commission is near impossible.
Another hurdle is 7-Eleven’s fuel supply contract with Mobil, which remains intact until 2034. This implies Ampol wouldn’t be able to supply fuel to the business.
Since service stations earn around 60% of their non-fuel revenue from tobacco sales, 7-Eleven doesn’t align with private equity funds focused on ethical investments. Moreover, these businesses are less attractive nowadays due to their ties to fossil fuels.
7-Eleven reports annual earnings (before interest, tax, depreciation, and amortisation) of approximately $220 million. Holding the license for the US-based 7-Eleven to operate and franchise in Australia, it boasts 750 stores, excluding Tasmania, Northern Territory, and South Australia. This presents potential growth for prospective buyers.
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