Little more than a month after Esso announced it had agreed deals to sell off its remaining 201 company owned sites to independent dealers, another swathe of oil company sites is heading for the independent sector, after Shell concluded deals to sell 185 of its forecourts.
As with the Esso deal, the lion’s share has been claimed by the biggest companies in Forecourt Trader’s Top 50 Indies. However, Shell is remaining tight-lipped about the destination of 27 of the sites, except that they have gone to another five smaller companies details to be revealed shortly.
David Moss, Shell’s retail general manager, North Europe, said: "We wanted to ensure that smaller companies can grow with Shell as well as the larger ones. However, as long as we’re getting the right value for the sites, and selling to those companies that are going to grow the business, size was not a determining factor."
Motor Fuels Group (MFG) is the biggest winner this time, with the purchase of 90 sites, while Euro Garages is taking on 68, adding to the 104 sites it agreed to buy from Esso a month earlier. Shell would not reveal the locations of the 185 sites until all the retailers involved had been informed, but it said they were spread across its network, and that the transactions would be completed by the end of the year. "We’re keen that the customer isn’t adversely affected, so we need to phase in the transition process," said Moss, He confirmed that the sale of the 185 sites meant the company had achieved the objectives set out in its original plans announced last year to sell up to 250 sites, and that no more sites would be sold as part of that strategy. A statement from Shell said: "The commercial process enabled us to consider offers on a site-by-site basis and 185 service stations represented the best result to achieve our strategic objectives. There was considerable interest in these sites and we are very pleased with the outcome."
The deals, which tie the sites into the Shell brand and fuel supply for five years, mean Shell strengthens its relationship with Euro Garages, but also adds a major new customer in MFG.
Moss said: "I’m pleased these dealers have chosen to grow their businesses with Shell and are as committed as we are to delivering high-quality products and customer service. Our retail business is going from strength to strength, with record sales of our premium fuel, Shell V-Power Nitro+, the growth of our popular Deli2Go food and beverage range and our new relationship with PayPal, which will offer mobile payment to more than four million customers a week."
Moss added: "Our priority is to ensure that a consistently excellent customer offer is available across our network, whether the service station is owned by Shell or by an independent dealer. That’s why we selected these independent dealers to work with, as they will invest in the sites and aim to deliver the same high standards of safety and customer care that are synonymous with the Shell brand."
MFG’s managing director, Jeremy Clarke said: "We are delighted to be bringing another major brand to the MFG network. This acquisition gives us 90 high-volume, quality stations that reinforce our commitment to become one of the most dynamic and profitable independent forecourt operators in the UK. We are looking forward to working with Shell to maximise the potential of these sites to the benefit of our customers. The stations will be transferring to MFG during summer and early autumn. Customers will, of course, continue to enjoy Shell’s high-quality fuels and lubricants and going forward, have the added benefit of MFG’s excellent, local convenience retail offer."
Zuber Issa, chief executive of Euro Garages, said: "We look forward to working closely and extending our relationship with Shell. The site portfolio secured extends our UK presence and consolidates our existing forecourt estate. As a result, more customers will be able to enjoy our branded retail convenience offer, while still being able to access quality Shell fuels and lubricants."
Even for companies with as many sites as MFG and Euro Garages, the deals represent large acquisitions for them to integrate into their businesses. In the Forecourt Trader Top 50 Indies 2015, published at the beginning of March, Euro Garages was ranked fourth with 182 sites. Since that time it has agreed to buy 104 Esso sites as well as the 68 Shell sites nearly doubling its size to more than 350 sites. This moves it above third-placed Rontec, which had 210 sites when the 2015 Top 50 was published, but has since sold 15 sites to Asda and agreed to acquire 19 of the final tranche of Esso sites. However, Euro Garages has already proved adept at integrating large numbers of sites having acquired packages of 45 sites in 2013 and 48 sites in 2014, both from Esso, and by the time of the 2016 Top 50 Indies it will have trebled in size from the 120 sites it had just three years earlier.
However, MFG will still be comfortably in second place in the Top 50 with more than 370 sites after adding the 90 Shell sites to its existing estate of 283. The growth of MFG has been even more explosive than Euro Garages. In October it added Murco’s 228 company owned sites to its 60-strong estate, plus the supply deal for more than 200 dealer-owned Murco sites. The company is currently going through re-branding all of the company owned Murco sites as new supply deals with BP, Valero and Jet came into operation in April, together with a new supply deal with Harvest Energy for the Murco-branded dealer sites. The re-branding of company owned sites is due to be completed by July little time to draw breath before Shell joins its growing list of suppliers.
Focusing on fewer sites
Shell announced plans to sell up to 250 of its company owned sites in the UK to independent dealers last September.
It told retailers that while the UK market was important to Shell, and that it would continue to grow its business in the UK, it believed that to ensure it remained a leading retailer this growth required further investment.
The company said it had therefore decided to focus on fewer company owned sites and as a consequence, it planned to sell part of its company owned network up to 250 sites to independent dealers who would retain the Shell brand and offer the same products and level of service to customers, and who could make the investments needed on those sites to ensure they remained competitive.
In Forecourt Trader’s Fuel Market Review 2014, which was published last June, Shell reported that it had 789 company owned sites and 231 dealers, giving a total of 1,020 supplied sites.
The company’s estate experienced a substantial boost in numbers in June 2011 when it acquired 253 sites from Rontec as the forecourt operator took over Total’s retail business in the UK.