Vivo Energy, the Shell franchise owners in in Kenya, and South Africa's Engen have announced the completion of a deal that combines their respective businesses in Africa.
This follows the acquisition of PETRONAS's 74 per cent shareholding in Engen by Vivo Energy, creating a pan-African energy entity.
PETRONAS or the National Petroleum Limited is a global Malaysian energy company with a presence in over 100 countries.
The combined Vivo Energy Group now has over 3,900 service stations, and more than two billion litres of storage capacity across 28 African markets.
The Phembani Group, Engen’s long-standing B-BBEE shareholder, is continuing its strategic association with Engen and will remain invested as a 21 per cent shareholder in the South African business.
Broad-based black economic empowerment (B-BBEE) is a central part of the South African government's transformation strategy, which was set up to help reduce inequality between black citizens and other racial groups within the country.
Under the deal, a new five per cent employee share ownership programme is being created, resulting in Engen South Africa being 26 per cent owned by historically disadvantaged persons.
Following the announcement of the transaction in February 2023, all parties have been working towards securing regulatory approvals and fulfilment of conditions precedent across the seven markets where Engen operates.
These have now been completed, with conditions.
In a joint statement, Vivo Energy Group CEO Stan Mittelman and Engen managing director and CEO Seelan Naidoo, said:“We are delighted to conclude the transaction, and will now work together to take the best of both from Engen and Vivo Energy, positioning the combined organisation well for growth and success in the years to come.”
The enlarged Vivo Energy will only make changes that add value, keeping a ‘business as usual’ approach for customers, partners, suppliers, and employees, it said.
The new organisation will continue to place a strong focus on delivering added value and benefits for customers and stakeholders.
“As part of the transaction, Vivo Energy has committed to invest a significant amount of capital expenditure to maintain and grow Engen’s operations in South Africa, ensuring a modern and efficient business, for the benefit of the South African population," the two managers said.
They have also committed to major investments in renewable solar power generation projects to help transform the economy, while supporting a just energy transition for the country.
Phuthuma Nhleko, Chairman and Co-founder of Phembani Group, said: “Having been invested in Engen since 1999, we are excited to continue our involvement, partnering in a strategic relationship with Vivo Energy in the next phase of Engen’s growth as a key player in SouthAfrica’s economy.”
PETRONAS has been at the helm of Engen's stewardship for over 25 years.
"The combination of Vivo Energy and Engen to create a pan-African champion not only benefits customers in South Africa and across the continent, but also sets up the new Group to achieve its vision to be Africa’s leading and most respected energy business,” Vivo Energy chairman, Chris Bake, said.
Local oil marketers have been on an expansion spree and acquisitions in the last two years, in an effort to beat competition.
Firms including Ola Energy and the French-owned Rubis have also stepped up their expansion in recent times.
Vivo Energy, Total and Rubis continue to dominate the Kenyan market with 23.8 per cent, 17.3 per cent and 10 per cent market share, respectively.
Other key players are Ola Energy, Oryx, Be Energy, Tosha Petroleum, Galana Oil, Hass Petroleum and Gapco.
